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Tether criticized TerraUSD

Tether Technical Director Paolo Ardoino compared the TerraUSD (UST) algorithmic stackcoin to a “card lock” that was bound to collapse at any moment. According to him, the project is simply “poorly designed.”

“I don’t know Do Kwon. But let’s give him the presumption of innocence. He created this project with arrogance and the idea that he was right, and many people supported him, for economic reasons, of course. However, the project itself was not right. It was poorly designed, as were many others,” he said on the Reimagine podcast.

According to Ardoino, he and many others understood that the UST launch was a “bad idea.” The CTO stressed that Kwon himself realized that this “card castle” could collapse at any time, but he didn’t have the opportunity to publicly declare it.

Earlier, Tether’s CTO said that algorithmic stackcoins like TerraUSD are dangerous for the market. In a podcast, he echoed that sentiment.

According to Ardoino, UST failed to maintain parity with the U.S. dollar because of its high capitalization because there wasn’t enough collateral to fix the volatile market.

At the same time, BTC sales from the Luna Foundation Guard reserve fund put enough pressure on the bitcoin price that “the market collapsed even more.”

“Essentially, they were in a cascading situation where the need to protect parity forced them to sell collateral, which provoked additional collapses [of quotes] that forced them to sell even more collateral and so on,” Ardoino explained.

He stressed that the UST collapse would bring even more regulatory attention to the segment. However, he believes policymakers should start by properly categorizing the assets, since steblecoins like USDT are fully collateralized by reserves.

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