Maker founder Rune Christensen has spoken out against two rivals. He stated that UST, Terra’s dollar-pegged stablecoin, and MIM, another collateralized stablecoin, were “solid ponzis” and that the bear market would eventually lead their prices to zero.
Maker Co-Founder Calls out Competitors
Rune Christensen is one of two co-founders behind DAI’s creation and development. Christensen indicated that he got tired of being nagged by UST and MIM “reply guys” on Twitter, and indicated his opinion about these two relatively new stablecoins, comparing them with DAI. Christensen stated:
UST, MIM and MIM are both solid ponzis. I appreciate that. They can be very profitable. They aren’t built to be resilient and will go down with the market.
Christensen explained that DAI is built to be resilient and that it has the highest trust when it comes smart contracts, collateral security, and that DAI can also use them for that purpose. DAI was renamed by UST in December to be the most valuable stablecoin-project. DAI still ranks second in market capitalization among decentralized stablecoin project.
Engineered differently
MIM, UST and DAI all are decentralized stablecoins by name but each is designed differently. While DAI and MIM are collateralized stablecoins — meaning that there are other assets backing their value in case of a selloff — UST is a pure algorithmic stablecoin, whose peg is maintained through arbitrage incentives.
These collateralized stablecoins have been criticised because some of their funds are made up of central stablecoins. A graphic shows that this is the case. providedChristensen estimates that USDC is responsible for 37.4% (37.4%) of DAI. Christensen also pointed out the problems MIM faced in this area, suggesting that it could have a greater percentage of its backing from centralized stablecoins.
Last year saw a huge growth in stablecoins, USDT being the largest stablecoin on the market. It went from having a market capitalization of $20 billion at the beginning 2020 to nearly $80 billion by 2021. Decentralized alternatives grew faster than that, with UST increasing its market cap more than 50-fold. MIM also managed to achieve a capitalization of $4.6 Billion since its founding in September last year.
What do you think about the Maker co-founder’s statements on UST and DAI? Comment below.
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