Which stablecoin protocol are you behind? USDT? MIM? Or Abracadabra.Money or Terra Inc.? Which one is the most resilient, the most stable, and which will last? Which stablecoin protocol should you trust?
Abracadabra.Money and Terra are two rival stablecoin protocols pushed by MakerDAO founder Rune Christensen.
As a result, Daniele Sestagalli and Do Kwon, founders of Abracadabra.Money and Terra Inc., shot back at Christensen, saying UST and MIM are “not built for resilience.”
Earlier this morning, MakerDAO founder Rune Christensen referred to the UST and MIM stablecoins as “solid ponzi schemes”. Daniele Sestagalli and Do Kwon of Abracadabra.Money and Terra immediately responded.
MakerDAO Founder Goes Ballistic On DeFi Stablecoins
In two recent tweets, MakerDAO founder Rune Christensen called out Terra’s TerraUSD (UST) and Abracadabra, two of DeFi’s fastest-growing stablecoins.
Terra, Abracadabra.Money, and Magic Internet Money (MIM), rivals to MakerDAO’s DAI stablecoin. In the tweet, Christensen referred to them as “solid Ponzi schemes,” asserting that they were “attempting to scam users looking for stability.” He wrote:
“Look, UST and MIM are solid ponzis and I respect that. You can make good money off them for sure. But they are not built for resilience and they are going to 0 once the market turns for real. Now stop trying to scam users looking for actual stability into being ur exit liquidity.”
“I thought you were already ded,” responded Terra founder Do Kwon. Abracadabra.Money founder Daniele Sestagalli also responded, suggesting Christensen focus on “saving the world from pollution” and to let them take care of DeFi.
Kwan’s “ded” comment is likely a reflection of Christensen’s apparent absence from the DeFi community in the past few months; in November, Christensen came under fire in the MakerDAO community after a former employee accused him of “trying to fire someone” after returning to the project. After being absent from the MakerDAO forum for a long time, Rune has decided that we are at war again,” she wrote. Almost immediately, Dragonfly Capital enlisted Christensen as a Venture Partner.
In addition to Christensen’s divisive October essay, the debates focused on how MakerDAO should focus on “Clean Money” by using “sustainable and climate-aligned assets that consider the long-term effects of financial activity on the environment” as part of its collateral.
Christensen argued MakerDAO’s collateral should be invested in sustainable real-world assets. However, the post caused a lot of controversy due to MakerDAO’s lack of direction. MakerDAO’s DAI, a decentralized stablecoin with a market cap of $9.1 billion, is one of DeFi’s most popular stablecoins. However, it’s partly collateralized by USDC, a centralized stablecoin by Circle.
Abracadabra.Money and Terra announced a partnership in October that aims to compete with centralized counterparts by using their UST and MIM stablecoins. Since then, both projects have seen immense success; UST has surpassed DAI as the largest decentralized stablecoin on the market.
Sestagalli and Kwon have both spoken out against DAI in the past, arguing that the stablecoin is not sufficiently decentralized because USDC is part of its backing.
MakerDAO’s DAI vs. UST vs MIM: Which Is Better?
Terra’s UST is an algorithmically governed stablecoin based on seigniorage. To maintain price stability and growth, Terra uses a flexible monetary policy. The LUNA token is not collateralized in MakerDAO’s DAI, and its price is kept stable with the LUNA token.
As for Money’ MIM, it is an overcollateralized stablecoin similar to DAI, but is backed by yield-bearing assets rather than ether tokens as in other cases (such as MakerDAO).
The two rivals of DAI, according to Christensen, are relying on unstable stability mechanisms that could collapse under market pressure.
UST and MIM are theoretically opposed because the former is overcollateralized by “low quality” assets, while the latter is dependent on sustained demand for LUNA. Both stablecoins have held their pegs despite several significant market fluctuations.
Via this site.