Yet another algorithmic stablecoin might be considering plans to become de-pegged from the U.S. dollar.
TerraUSD (UST) recently disclosed plans to launch a new liquidity pool on Curve. According to the announcement, the move to launch the liquidity pool is in a bid to strengthen the Terra USD (UST) stablecoin.
The announcement also closely follows the Neutrino dollar’s (USDN) fall from being backed 1:1 to the USD. Notably, USDN is the algorithmic stablecoin of the Waves ecosystem.
Terra To Launch Curve Liquidity Pool Dubbed “4pool”
In a bid to further strengthen its stablecoin, Terra is currently focused on the launch of its incentivized Curve liquidity pool. Interestingly, the launch of the pool may serve as a threat to the DAI stablecoin. TerraUSD (UST) has been recording exponential growth over the last couple of months. This January, the Terra ecosystem surpassed Binance Smart Chain (BSC) to become the second-largest DeFi chain.
The launch of the Curve pool (dubbed “4pool”) will boycott the DAI stablecoin while including four other stablecoins. The supported stablecoins include TerraUSD (UST), FRAX, Circle USDC, and Tether USDT. This pool will help strengthen TerraUSD (UST) and may also signal a move to become de-pegged from the U.S. dollar.
Curve wars are over, all emissions are going to the 4pool https://t.co/LNJs7CAfcV
— Do Kwon 🌕 (@stablekwon) April 1, 2022
Strengthening UST Is the Goal – Kwon
Redirecting liquidity from “3pool” with Terra steadily building its Bitcoin reserve will furthermore help to strengthen UST. Helping to redirect large-scale traders from the DAI ecosystem to TerraUSD (UST).
4pool goal is definitely not to destabilize dai – it is to make it less relevant, for which tbh it needed none of my help
And missing the boat on utility while overallocating on collateralization is why Maker got to where they are in the first place
— Do Kwon 🌕 (@stablekwon) April 4, 2022
The launch of the “4pool” will to a large extent starve the pre-existing “3pool” of liquidity. This may in turn negatively affect the strength of the DAI stablecoin. According to Do Kwon, CEO and founder of Terraform Labs, this is the idea behind the launch of the highly incentivized Curve liquidity pool.
About Terra USD (UST)
Terra USD (UST) is an algorithmic stablecoin of the Terra ecosystem. Launched in October 2021, UST has grown steadily. It also currently has a market cap of $16,731,384,833 and a 24-hour trading volume of $1,073,595,129.
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