Terra Announces Replacement of Fallen UST
Wrath was brought down upon the crypto community about five months ago when stablecoin terrausd (UST) witnessed a great fall. At that time, once a popular stablecoin lost too much of its value, impacting its parity with the USD.
Because of the fall, UST started to swap hands at a price $0.03 per stablecoin which also resulted in Terra changing its network. The network was then changed from ‘Terra blockchain’ to ‘Phoenix blockchain’.
When Terra sent live its 2.0 network that gave birth to Terra (LUNA) 2.0.
Now that because of the depegging UST is no more, however, there is another Defi project namely Catapult Finance which has announced the launching of fresh ‘soft-pegged stablecoin’.
According to the announcement, the Defi project plans to issue the proposed stablecoin on top of ‘Solid’, which subsequently is a network of Terra.
Catapult Finance has showcased its plans through a whitepaper which it has named as “Solid – A Soft-Pegged Stablecoin”.
Lack of Stability in Stablecoins
As per the whitepaper, Solid would be a soft-pegged decentralized stablecoin exclusively to be launched on the Terra network.
Solid’s whitepaper originally came to the surface on 19th October 2022 wherein an emphasis was made that the decentralized finance sector is in dire need of firm and steady stablecoins.
However, the whitepaper takes note of the matter that the majority of stablecoins which are backed by fiats are neither steady nor stable.
The whitepaper further notes that in order to make blockchain technology accessible to the wider public, blockchain requires assets whose volatility is minimal.
It was further endorsed in the whitepaper that a decentralized stablecoin is the need of the hour for facilitating a decentralized economy.
The paper further describes that it would be only through the collateralized debt position (CDP) that a user can mint Solid. This means that the basic structure of Solid is very much the same as ‘Makerdao’.
In Makerdao, if the user wishes to borrow stablecoin, then the user must ensure the depositing of interest earnings as security/collateral. Otherwise, there shall be no stablecoin at all.
Collateral Is Must For Stability
As compared to UST, Solid assures of having minimal volatility which would ultimately introduce more stability because of the security/collateral.
Looking at the official webpage of Catapult, one thing is noticeable the defi project has put up a banner suggesting that the ‘application is on the way’.
Currently, the entire stablecoin economy is worth more than $146.44 Billion. USDT and USDC are amongst the top leading stablecoins in the world. Both of them are USD backed stablecoins.
It goes without saying that many crypto protagonists believe that Terra’s fall is behind the distressed crypto market. Some even blame the senior executive of Terraform namely Do Kwon for lowering Terra network’s reputation.