Modern Economical Nonsense — The Treasury Problem

xuanling11
Coinmonks
Published in
3 min readMay 16, 2022

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I commented on how UST was collapsed and quoted:

UST is a so-called algorithmic stablecoin, meaning that it’s not backed by assets like cash or cash-equivalents. Instead, it relies on trading and treasury management to maintain its value.

It is fake liquidity that will not work during the market correction.

Also, Cory Doctorow pointed out that it is similar to the 2008 housing crisis.

I could not agree more simply that Terra just had its 1929-like crisis mode while the Defi industry is facing its 2008-like crisis now.

Using Bitcoin as the Treasury-backed management did not prevent the fall out of the Terra.

The worst is “hard money” economy cannot prevent default when the market is falling intensely.

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