Tether (USDT) and Bitfinex chief technology officer Paolo Ardoino claimed the Terra (LUNA) initiative was “poorly designed” and not intended to be a rug pull.
Ardoino compared its algorithmic stablecoin TerraUSD (UST) to a “castle of cards” that could collapse at any time in response to the Terra ecosystem’s market-shattering disaster.
Many in the crypto world have cited a long record of suspicious statements and acts made by Terraform Labs founder Do Kwon, raising concerns about his behavior. Kwon also worked on the previously failed algo-stablecoin project Basis Cash, according to reports.
Ardoino made the remarks on the Reimagine Unplugged podcast this week, which is produced by Reimagine, a media firm that specializes in Web3 content and events. The chief technology officer indicated that Kwon’s erroneous feeling of self-confidence was a major issue:
“I don’t know Do Kwon. But let’s give him the benefit of the doubt. He created this project with arrogance and with thinking that he was right and many were supporting him, of course, probably for economic reasons, but was not per se, a rug pull, it was a project that was poorly designed as many projects are poorly designed.”
The entire crypto community is talking about Terra’s fall
Ardoino went on to say that UST had grown too big to keep its peg, claiming that its collateralization, which was predominantly in Bitcoin (BTC) at the time as it worked to create reserves, was not large enough to support the stablecoin but was “huge enough to crash the market even further.”
“They were basically in a cascade situation where they had to protect the peg, so they had to sell the collateral. Selling the collateral was generating more crashes, and these extra crashes were driving them to sell more or collateral on,” he explained.
When asked about the future regulatory landscape for stablecoins, Ardoino advised that legislators first identify the difference between stablecoins that are entirely backed by assets and those that are supported mainly by algorithms.