Sonic Labs has canceled his intention to launch a stable algorithmic fished in US dollars, opting rather to develop an alternative to the United Arab Emirates.
On March 22, the co-founder of Sonic Labs, Andre Cronje, said that the company was working on a stablecoin algorithmic caught in US dollars with an annual percentage rate (APR) which could reach 23%, Cintelegraph reported.
However, a week later, the company reversed the course.
“We will no longer publish an algorithmic stable piece based on the USD,” said Cronje in a post on March 28. “Completely unrelated, we will publish a mathematically linked digital dirham which is adjusted and called in USD, which is certainly not a stable algorithmic part based on the USD.”
The change of strategy occurs shortly after the water announced that it would launch its digital digital currency from Dirham Central Bank (CBDC) in the fourth quarter of 2025.
Source: Andre Cronje
Khaled Mohamed Balama, governor of the Central Water Bank, said that Dirham, based on blockchain, could improve financial stability and help fight financial crime. Digital currency will be accepted alongside its physical counterpart in all payment channels, according to a Khaleej Times report.
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Sonic was criticized on Stablecoin’s plans
The overthrow follows a widespread criticism of the original plan of Sonic to launch a stable algorithmic – a model that has raised concerns in the cryptographic industry since the collapse of the terra ecosystem in 2022.
Cronje himself previously admitted to having undergone a post-traumatic stress disorder (SSPT) linked to the stablecoin algorithmic due to the previous cycles:
“Above sure, our team has cracked stable coins Algo today, but the previous cycle gave me so many SSPTs, I don’t know if we have to implement.”
In May 2022, the $ 40 billion terra ecosystem collapsed, erasing tens of billions of dollars of value in a few days. Stablecoin algorithmic terra, terrausd (UST) had given an annual percentage of more than 20% (APY) on the anchor protocol before its collapse.
While UST lost its ankle in dollars, crashing at a hollow of about $ 0.30, the co-founder of Terraform Labs, Do Kwon, went to X (then Twitter) to share his rescue plan. At the same time, the value of Sister Token Luna – once among the first 10 crypto projects by market capitalization – plunged more than 98% to $ 0.84. Luna was exchanging north of $ 120 at the beginning of April 2022.
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The collapse of the Stablecoin algorithmic transmitter has created shock waves among cryptographic investors and legislators.
To reduce the systemic risk, the bill on European markets in crypto-active assets (MICA) prohibit algorithmic stablecoins to avoid another TERRA failure.
Meanwhile, Stablecoins are used more and more for smaller daily payments rather than important transfers, according to the Coinfund director of Coinfund, David Pakman.
“We have noticed a significant decrease in the size of each transaction of Stablecoin, which underlines the fact that they are used more as payments and less for large transfers,” said Pakman during the live chainreaction program on Cointelegraph on X on March 27.
https://www.youtube.com/watch?v=1iyxu9w47to
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