Opinion: after the collapse of Luna, other algorithmic tokens will face the same fate

Reeve Collins, co-founder of cryptocurrency company BLOCKv, believes that the fall of the UST, which caused the Terra ecosystem to fail, could be the beginning of the end of all algorithmic stablecoins.

Speaking to journalists at the Davos Economic Forum, Collins said that the UST’s decoupling from the US dollar was not a surprise to him at all. According to the co-founder of BLOCKv, over the past few months, many investors have realized that the algorithm-based stablecoin is not reliable and have withdrawn their funds. That is why the asset’s decline has become cascading, and this could spell the end for most algorithmic tokens.

However, the CEO of Circle did not support Collins' opinion. Jeremy Ellair compared algorithmic stablecoins to the Holy Grail. According to him, financial «alchemists» will continue to work on algorithmic tokens, but it is still worth waiting for the reaction of regulators.

It is worth noting that the global crypto community continues to discuss the collapse of Terra and UST. Recently, Binance CEO said that he was skeptical about the revival of the Terra ecosystem and the successful launch of the new LUNA token.

Prior to that, Binance announced that it would launch an investigation into fraud on the part of the Luna token team. The CEO of the crypto exchange asked an internal investigation team to examine the accusations of Twitter insider FatMan against Terraform Labs.

At the same time, South Korean authorities announced that the country will start strict control of cryptocurrencies due to the Terra collapse.