Buterin criticizes Terra saying No Genuine Investment can get anywhere close to 20% APY
Buterin joins the list of Terra’s critics in stating that no credible investment can guarantee a 20% yearly return.
Ethereum co-founder Vitalik Buterin stated that there is no real investment that can produce returns of anywhere near 20% per year when addressing the Terra blockchain’s implosion, which drove the crypto market into freefall earlier this month.
TerraUSD and its sibling LUNA have been the main drivers of the bear market, with TerraUSD plummeting to almost zero in a matter of days, wiping off $60 billion in Terra coins alone.
The stablecoin’s guaranteed interest rate, which was set as high as 20% for UST deposits in the Terra blockchain-based lending program Anchor, was one of the stablecoin’s key draws for investors.
Below is a video of one such review where Terra was supposedly expected to return 20% per annum:
“More oversight of defi financial instruments, particularly those aimed at ‘capital efficiency,’ is very welcome,” Buterin said in a statement issued on Thursday. “It’s even better that more people are realizing that past success (or even the lack of catastrophic collapse) does not guarantee future returns.”
The well-known engineer also explores ways for maintaining automated pure-crypto stable coin pegs, while he warns against discarding the category entirely. Unlike Tether and USDC, automated stablecoins have characteristics like a truly decentralized targeting mechanism that maintains a price index and is not reliant on asset custodians.
Buterin also suggests examining how safe systems are by examining their steady-state and pessimistic states to see how they work in difficult environments and whether they can safely wind down. He also warns about other risks associated with autonomous stablecoins, including technological difficulties.
Terra has been slammed by other Bitcoin experts:
As you may recall, cryptocurrency experts have rebuked TerraForm Labs, the business behind the well-known blockchain Terra.
The failure of the company’s ecosystem tokens, according to these crypto experts, was caused by the project’s architecture as well as the project’s large staking incentives of 20% on the Anchor protocol.
Following the project’s collapse, industry luminaries such as Binance founder and Circle CEO, among others, have rebuked Terra.
Changpeng “CZ” Zhao not only stated his dissatisfaction with Terra’s handling of the problem, but he also halted trading in the Terra ecosystem tokens UST and LUNA in order to protect investors from future losses.
Terra’s Attempts to Repay Investors:
Investors are eagerly awaiting Terra 2.0’s official launch, which is scheduled for later today. Multiple cryptocurrency exchanges have announced that they would support the Terra network’s rebirth and have taken significant steps to prepare, as previously reported.
Following the launch, TerraForm Labs will initiate an airdrop of extra LUNA tokens to existing Terra 2.0 holders to compensate them for their losses in recent weeks.
Also Read: Terra’s (LUNA) comeback on May 27 with Close Support from Binance