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If The Bank Can Depeg Your StableCoin, It’s Not A StableCoin

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The past week was one hell of a rollercoaster for the crypto community especially the stablecoin category, as we started seeing some StableCoins destabilise. It brought some LUNA/UST PTSD feelings all over again. But in this case it was different, for the Luna/UST depegging it was a matter of fault in the programming of the blockchain. But this time it was the bank, and one of the biggest StableCoins in the crypto community was affected by the shutdown of the bank. Circle is known as the company behind the issuing of the mouse USDC, but does it have its own blockchain? Nope, it is just a token on the Solana blockchain and its fully fiat backed.
This means that to maintain its value it has to depend on fiat, where is this fiat kept? Well, it seems like some of the fiat was kept in a bank, unfortunately the bank got shut down with some of circle’s backed fiat in it. Now where is the decentralisation? Meaning that circle is completely dependent on centralised organisation to keep its activities. The crypto space and technology is ready to be fully independent of centralised entities like the bank, if only some companies and parties can be sincere and remove their selfish interest aside. If bitcoin can survive being decentralised for more than 10 years and has the blockchain running for that long without shutting down like Solana always do, then there has to be a way to create far more better technologies that will be completely independent of centralised entities like the bank, especially for StableCoins.

Well, we have the HBD for instance but I can’t say it is 100% stable, sometimes we see the price rise above $1 and sometimes the price go below $1 but the blockchain is constantly trying to stabilise it, but it is completely decentralised and doesn’t need the bank. One of the issues we have regarding HBD is the fact that its adoption is very small, small amount of us use it and its not traded in a lot of centralised exchanges, thereby making the demand really small. During the USDC Depew from $1 we watched other StableCoins Depew as well as some of them are also backed by USDC, making the entire thing looking like dominoes effect. We need more decentralised StableCoins, because challenges like the silicon value bank shutdown just shows to remind us that we are not safe from the government.

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