Sonic's Algo Stablecoin: A Recipe for Disaster or Salvation?

Well, now, if you’ve ever fancied a good ol’ crypto roller-coaster, look no further than the Sonic blockchain. This here gang is cookin’ up a fine mess in the form of a high-yield, algorithmic stablecoin. Folks are a-squirming with fear, mind you, recalling the grand old collapse of Terra-Luna, which turned the crypto world into a frozen tundra faster than you can say “bear market.” 🚀💼

Algorithmic stablecoins, you see, are these clever critters that use fancy code to keep their prices steady, as opposed to those trusty old fiat stablecoins that just hitch their wagon to the value of a good, solid currency. Ain’t nobody got time for that, right?

Now, Andre Cronje, the brain behind Sonic Labs and Yearn.finance, reckons they’ve got a winner here. He’s promising yields up to 23% annual percentage rate (APR). That’s a lot of 🍭 for a lot of folks, ain’t it?

“POC looks good. Yielding > 200% APR @ 10m tvl, around 23.5% APR @ 100m, steady at around 4.9% at 1bn+. Will scale up and get team for a full release.”

Only a day before, Cronje admitted to having a touch of post-traumatic stress disorder (PTSD) when it comes to these algo stablecoins. He’s seen the ghost of Terra-Luna too many times, I reckon.

“Pretty sure our team cracked algo stable coins today, but previous cycle gave me so much PTSD not sure if we should implement.”

Back in May 2022, the mighty Terra ecosystem crumbled like a house of cards, wiping out tens of billions in value. The algorithmic stablecoin, TerraUSD (UST), was yielding a whooping 20% APY on the Anchor Protocol. But when UST lost its dollar peg, it crashed to a low of around $0.30. Do Kwon, the Terraform Labs co-founder, was aflutter with rescue plans, but by then the sister token LUNA had plunged over 98% to a measly $0.84. For reference: LUNA was trading around $120 in early April. 💻🔥

Sonic claims to be the world’s fastest Ethereum Virtual Machine (EVM) chain, with a “true” 720 milliseconds (ms) finality. That’s the speed at which a transaction becomes irreversible, folks—quicker than a rabbit in a rabbit hole. 🐰 Speedway!

Sonic has been turning heads since its testnet hit that 720 ms finality on Sept. 8, 2024. People are a-buzzin’ like bees in a hive.

Investors Still Dabblin’ in Collapsed LUNA

The Terra (LUNA) token has taken a nosedive of over 98% from its all-time high of $19.54 on May 28, 2022. Despite the crash, the token still saw over $21 million in trading volume over the past 24 hours. That’s a lot of folks still buying into a dead token, says technical analyst Optimus KevTron. 🕵️‍♂️ ‘%$

The collapse sent shockwaves through both crypto investors and lawmakers. To avoid another Terra disaster, the European Union’s Markets in Crypto-Assets Regulation (MiCA) bill aims to prohibit the issuance of algorithmic stablecoins. Looks like the regulators are gettin’ their house in order, one way or another. 🏛️”));

2025-03-23 13:37

Sonic’s Algo Stablecoin: A Recipe for Disaster or Salvation?

Investors Still Dabblin’ in Collapsed LUNA

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