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What Are Algorithmic Stablecoins, And Why Can They Be A Problem?

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ValueWalk

When most people with some level of knowledge about the crypto markets think about stablecoins, they imagine cryptocurrencies with stable valuations that are pegged to a particular asset or fiat currency like the U.S. dollar. However, algorithmic stablecoins are much more complex. They rely on algorithms and a second cryptocurrency to maintain their peg, making implosions like what happened to the original Terra coin possible. Q1 2022 hedge fund letters, conferences and more Takeaways Like standard stablecoins, algorithmic stablecoins are pegged to another asset like a fiat currency, precious …

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