Despite the fact that the collapse of Terra in May already seems like something far away, its echoes can be heard in 2023. The developers of the Vader protocol informed users about the closure of the stablecoin - Vader Protocol US Dollar (USDV).
Back in May, in response to the collapse of Terra stablecoin, the team stopped the burn-to-mint function to protect users and began work on improving the stablecoin:
“As a precautionary measure, the Vader team paused the burn-to-mint function on VADER-USDV and spent the next six months researching novel ways to re-architecture the algorithmic stablecoin, which sits at the heart of the entire ecosystem.” - it is said in the official appeal.
However, according to the team, in six months there was no effective way found to change the algorithmic component of the stablecoin, and it was decided to quit the protocol. The developers noted that the funds from the protocol will be distributed between VADER and USDV holders.
“Unfortunately, upon rigorous research and discussions, the team found no notable breakthrough in the algorithmic stablecoin design that is capital efficient. Consequently, the team has decided to sunset Vader Protocol in the fairest way possible — by returning protocol-owned funds and team treasury to VADER and USDV holders.” - it is said in the official appeal.
In order for users to get their funds back, the developers have created an WebApp with which the remaining funds will be distributed among users until June 2023.
Now there are still algorithmic stablecoins on the market that work on the LUNA/Terra principle. Among the bright representatives with a large market capitalization are, USDD and USDN that stand out. USDD - according to СoinMarketСap, stablecoin from TRON, has a market capitalization of more than $707 million today. And algorithmic Neutrino USD (USDN) has a capitalization of just over $276 million. Perhaps it is these two stable coins that will be able to restore users' faith in algorithmic coins.
In the 13 crypto predictions for 2023, a lot is said about the development of stablecoins and their strengthening in the market, including the decentralized ones. Nevertheless, the algorithmic, Terra-like designs are troubled at the moment. What do you think the future holds for stablecoins? We will be glad to see your comments.