Sonic Labs canceled its plans to release a US-dollar-pegged algorithmic Stablecoin and has instead developed a United Arab Emirates-dirham-denominated alternate.
Sonic Labs is launching its March 22nd, 2019 launch. co-founder Andre Cronje said Cointelegraph revealed that the company is working on an algorithmic stablecoin pegged to US dollars with a percentage annual rate (APR of up 23%), according to Cointelegraph.
One week later the company reversed its course.
“We will no longer be releasing a USD-based algorithmic stablecoin,” Cronje made the statement in a post on March 28th. “Completely unrelated, we will be releasing a mathematically bound numerical Dirham, which is settled and denominated in USD, which is definitely not a USD-based algorithmic stablecoin.”
A shift in strategic direction is imminent the UAE announced it would launch The central bank will launch its digital dirham currency (CBDC), also known as the digital currency of the digital government, in 2025’s fourth quarter.
Source: Andre Cronje
Khaled Mohammed Balama said the dirham-based blockchain could help improve financial stability and combat financial crime. Digital currency is accepted in conjunction with its physical equivalent across all payment channels. according This is a story from The Khaleej Times.
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Sonic faces criticism for its stablecoin plan
The reversal follows widespread criticism of Sonic’s original plan to launch an algorithmic stablecoin — a model that has raised concerns across the crypto industry since the collapse of the Terra ecosystem in 2022.
Cronje himself previously admitted Previous cycles can cause Post-traumatic Stress Disorder (PTSD) in relation to the algorithmic stablecoin:
“Pretty sure our team cracked algo stable coins today, but previous cycle gave me so much PTSD not sure if we should implement.”
On May 20, 2022, there will be a new date. $40 billion Terra Ecosystem collapsed, erasing billions of dollar’s worth of value over a period of days. Terra’s algorithmic stabilitycoin TerraUSD (UST) had yielded an annual percentage yield of over 20% on Anchor Protocol before its collapse.
UST crashed from its $1 peg to a low around $0.30. Terraform Labs co-founder Do Kwon X then tweeted his rescue plan. At the same time, the value of sister token LUNA — once a top 10 crypto project by market capitalization — plunged over 98% to $0.84. LUNA traded north of $120 at the beginning of April 2022.
Related: Tether’s US treasury holdings surpass Canada, Taiwan, ranks 7th globally
Crypto investors as well as lawmakers were shocked by the collapse of an algorithmic stablecoin issuing company.
The European Union has taken steps to reduce the systemic risks. Markets in Crypto-Assets Regulation (MiCA) bill will prohibit Stablecoins algorithmic to prevent another Terra-like disaster
David Pakman, managing partner of CoinFund, says that stablecoins have become more popular for small, daily payments than large transactions.
“We’ve seen a significant decrease in the size of each stablecoin transaction, which points to the fact that they are being used more as payments and less for large transfers,” Pakman said during Cointelegraph’s Chainreaction On March 27, there will be a live broadcast on X.
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Source: cointelegraph.com
