Circle CEO Jeremy Allaire described Terra as a house of cards

Because Terra and algorithmic stablecoin UST were “a house of cards,” Jeremy Allaire, CEO of Circle, which produces the second-largest stablecoin USDC, claims to have predicted their collapse six months ago.

“There were two things that caught me off guard. “One was just how quickly the death spiral started and how dramatic the value erosion was,”

So, Allaire told Protocol in an interview.
“I was speechless; I’d never seen something dissolve so quickly in my life.”

Despite “obvious” hazards, Allaire was astonished by the high-profile backing for Terra and UST.

USDC differs from UST in that it is backed by assets, whereas UST is backed by Terra’s cryptocurrency LUNA and relies on incentive-based algorithms to keep its peg to the US dollar.

Last Monday, UST lost its peg to the dollar, wiping away billions of dollars from the Terra ecosystem and driving the cryptocurrency market down with it.

During the market upheaval, collateralized stablecoins USDT and USDC have mainly kept their pegs to the dollar, while algorithmic stablecoins like DAI have also kept their pegs.

Algorithmic stablecoins are the “holy grail” of decentralized digital currencies, according to Allaire, and will be pursued by others.

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