Rune Christensen, one of the founders of Maker, the decentralized autonomous organization behind the governance of the stablecoin DAI, has spoken out against both competitors. Terra’s dollar-pegged stablecoin UST and another collateralized stablecoin, MIM, are “solid Ponzi schemes,” he said, and a bear market will eventually drive their prices to zero.

Maker co-founder calls out rivals

Rune Christensen, one of the co-founders of the organization behind the creation and development of the decentralized stablecoin DAI, has assembled two competitors.Christensen indicated Expressed that he was tired of being nagged by UST and MIM “reply people” on Twitter, and expressed his views on the two relatively new stablecoins, comparing them to DAI.Christensen statement:

Look, UST and MIM are solid Ponzi schemes and I respect that. You can definitely make a lot of money from them. But they’re not built for resiliency, and once the market really turns, they go to zero.

Christensen elaborated that DAI is built for resilience, while noting that the project is the most trustworthy in terms of smart contracts and collateral security. However, UST Flip DAI became the most valuable stablecoin project back in December. Nonetheless, DAI ranks second among decentralized stablecoin projects by market capitalization.

different designs

While MIM, UST, and DAI are nominally decentralized stablecoins, they are each designed differently. While DAI and MIM are collateralized stablecoins — meaning there are other assets backing their value in the event of a sell-off — UST is a purely algorithmic stablecoin whose peg is maintained through arbitrage incentives.

Criticism of these collateralized stablecoins comes from the fact that some of the funds backing these assets are made up of centralized stablecoins.In fact, according to a picture if According to Christensen, 37.4% of the DAI generated is collateralized by USDC. However, Christensen noted that MIM has problems in this regard, too, suggesting that it may have a higher percentage of centralized stablecoin-based backing.

Stablecoin field grown up last year on a large scale, with USDTIt is the largest stablecoin on the market, with a market capitalization of nearly $80 billion in 2021 from $20 billion in early 2020. But decentralized alternatives grew faster, with UST’s market cap increasing by more than 50 times. Likewise, MIM has a market capitalization of $4.6 billion since its inception last September.

What do you think of the Maker co-founder’s statement on UST and DAI? Let us know in the comments section below.

Sergio Goshenko

Sergio is a cryptocurrency journalist based in Venezuela. He described himself late and entered the crypto space when prices rose in December 2017. With a background in computer engineering, living in Venezuela, and being affected by the cryptocurrency boom at the social level, he offers a different perspective on the success of cryptography and how it can help people without bank accounts and underserved people.

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