Rune Christensen, one of the co-founders of the company that created and developed DAI, a decentralized stablecoin, has singled out two competitors. Christensen expressed his displeasure with the UST and MIM “reply men” on Twitter, and expressed his thoughts on the two relatively new stablecoins, comparing them to DAI. According to Christensen,
“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.”
DAI, according to Christensen, is for resilience, and the project is the most trustworthy when it comes to smart contracts and collateral security. In December, however, UST flipped DAI as the most valuable stablecoin project. Despite this, DAI is the second most valuable decentralize stablecoin project in terms of market valuation.
While MIM, UST, and DAI are all decentralized stablecoins, they are all built in distinct ways. UST is a pure algorithmic stablecoin whose peg is maintained through arbitrage incentives, unlike DAI and MIM, which are collateralized stablecoins with other assets guaranteeing their value in the event of a selloff.
The fact that part of the cash supporting the assets are of centralize stablecoins has brings criticism of these collateralize stablecoins. According to a chart by Christensen, USDC is to collateralize 37.4 percent of DAI earned. However, Christensen points out that MIM has issues in this area as well. Thereby, implying that it may rely on centralize stablecoins for a larger portion of its backing.
Last year, the stablecoin industry spikes, with USDT, the market’s largest stablecoin. Thereby, rising from a $20 billion market value. That’s, at the start of 2020 to a near $80 billion market cap by 2021. However, decentralized alternatives grows even faster, with UST’s market cap increasing by more than 50 times. MIM, on the other hand, has a $4.6 billion market value since its launch in September.