Always cash out your chips.
This is not new news but it's worth posting to show that the so-called crypto stable coins are not that stable at all. Stable coins are supposed to be pegged 1-to-1 value with US dollar (called dollar parity). 1 stable coin was suppose to be equal to 1 US dollar.
Stable coins are favored by a lot of industry players because of its stability and predictability on its price. Cyber criminals also like to use these stable coins to extort or receive payments for money games (eg CFHFootball). Some people even accumulate stable coins because of its low volatility compared to the non stable coins like Bitcoin, ethereum etc..
TerraUSD jump out the peg (de-pegged) (Terra USD / USD) and collapsed to around USD0.30 within a few days.
The details of the plunge is quite technical to write over here but it is for now everyone's guess if TerraUSD can go back to the peg value of 1 UST (TerraUSD) to 1 US dollar.
The other popular stable coin called Tether (USDT) is also seem to drop out of the peg briefly but has recovered. However, the value of 1 USDT currently is still slightly below 1 USD. USDT is around 7-8 x bigger than UST at its height. A collapse of USDT will have much bigger effect on the cryptocurrency market.
This phenomenon (unpegging) should not happen since it was assumed that stable coins are always exactly pegged to the equal amount of US dollars. Some in the cryptocurrency community say the UST de pegged a lot due to its pegging mechanism being automated by an algorithm which was exploited and USDT is less vulnerable to this (depegging) and is backed by actual assets (which is questionable).
Some articles I read likened stable coins to be like the poker chips in a casino, it's meant as a temporary medium of exchange which needs to be converted into something else like Bitcoin, Ethereum etc. Holding on to a so called stable coin is a risk to investors/players in the long term. The risks of holding stable coin stems from lack of regulatory oversight and transparency in stable coins.
The other popular stable coin USDC (USD Coin) is an odd stable coin, seeming to be able to go above 1 US dollar but sometimes also depeg below 1 US dollar. It seems that different stable coins have different methods of stabilizing and pegging to the US dollar.
Same situation with Justin Sun's (Tron founder) USDD coin.
I'm not against cryptocurrencies but am very wary with branches of cryptocurrency products like crypto staking, defi, NFTs and stable coins. The primary reason for me being so wary is because I've seen numerous scams, pyramid schemes, and downright criminal activities on these products, making its viability as something useful very doubtful. Currently crypto scams are not really big in Malaysia, most Malaysians get scammed via money games and investment pyramid schemes.
For now, I can only advocate the primary coins like Bitcoin, Ethereum and Ripple XRP.
The latest stable coin to lose its peg is the DEI coin. It's around USD0.60 now where it should be at 1 USD.
