Learn why stablecoins cannot really stay stable
This year has been one of the toughest for the cryptocurrency market. The bears managed to hit even the stablecoins that could not maintain their peg with the U.S. dollar.
Moreover, it is not just algorithmic stablecoins that are being negatively impacted this year. USDT, citing an analogous case, despite being the main stablecoin asset on the crypto market, has also had its down days in 2022, moving away from the $1 mark at times.The trajectory of the giants USDC and BUSD has been no different. Even at the time of writing, Circle's stablecoin is trading at $0.99.First, it is necessary to analyze the decline of algorithmic stablecoins.
Also, in May, the DeFi Anchor project, a protocol that allowed users to deposit USTC to earn rewards, reduced its yield from 20% to just 4%. This took many investors by surprise, and they decided to take UST out of Anchor and sell it on the market. However, in times of market crisis, with the price of cryptos falling, if Dai does not have a good reserve, it might lose its peg with the dollar. That is happening at the time of writing.
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