Stablecoin Ponzis Are The New NFT Grift

It seems Do Kwon has discovered dynamite with his UST, Terra has gone from $3 to a high of $120 and now hovers around the $100 mark, what seems to be the primary growth factor has been the anchor protocol and the ability suck out supply to back a stablecoin known as UST. UST currently has a supply of 18 billion, meaning there should be around 180 million Terra locked up at the current value to back that.

In my opinion, it should be more as it needs to be over collateralised but hey what do I know? The demand for UST to earn the 20% on anchor encourages people to buy Terra, covert it to UST, and then lock it up to clip the premium.

An idea that, has obvious flaws which I've addressed previously but is the hot flavour in juicing your shitcoin price after the NFT market seems to have cooled off, one I also called a while back.

Everybody, Yeah Yeah, Copy the ponzi, yeah yeah

Backstreets back alright

You can see the copycats already rolling out in HBD and now USDD by everyone's least favourite crypto shill Justin Sun. Tron has been pretty much a cheap stablecoin moving chain and a gambling dapp chain and has been languishing.

Justin has been looking for a way to get back into the lime light and is clearly done copying Vitalik and now his keen on copying Do Kwon.

Since Tron has billions in circulation it will take more tokens to back his stablecoin and he claims he will start with 15 billion in USDD, which should suck up 200 billion in TRON to back that market, as well as liquidity pairs across the various DEX's run on TRON.

Sure this could adjust trons supply and juice the pumpa-mentals, adding some burning of TRON through his DEFI gateways and obviously wash trade on all these platforms can do wonders for the price short term.

It's all about attracting liquidity to your platform and the offers to do so, quickly become a pissing contest. 20% is already a stupid return that is grossly unsustainable but this is the competition, Do Kwon set the bar and now it's on everyone else to fight for liquidity by offering more outrageous rates.

The complexity continues

As more chains try to copy this technique you'll see more stablecoins backed by native coin pop up, like the NFT trade where these jpeg platfroms sprung up on different chains. I don't see this trend dying anytime soon as there is still a second layer of complexity that is likley to be employed.

Trading pairs and pools between these stablecoins bridged across each chain.

Yes you'll probably see something like TRON backing USDD and Terra backing UST

Then there is USDD on Terra and UST on Tron and pairs to trade between them. The complexity theature and risk will keep compounding in a desperate attempt to keep people locked in and promise them paper gains.

You'll probably see these stablecoin pools having massive APRs to keep people locked in and not to unwrap/burn their stablecoins to get the natve token so they can dump for fiat.

Shortening the lifespan of the trade

That may be the next leg but having all these chains competing with the same Ponzi, will shorten the life span of the Ponzi so you have to cook up additional layers faster to keep people involved as the yields go down.

How long can this con go on for? No one knows, but I am putting my theories out there and if I'm proven wrong, I'll be the first to admit it.

However, this frenzy has so many telltale signs of ones we've seen before and like the previous ones will leave as quick as it came, leaving a trail of broke investers in its wake.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, "I am a Jessie."

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