As the autumn of Terra (LUNA) and TerraUSD (UST) could have a noticeable short-term affect on the decision-making of each retail and institutional traders, it would not pose a danger to the bigger crypto ecosystem, in keeping with Huobi Global CEO Du Jun.
In an interview with Cointelegraph, Jun defined that the collapse of Terra will have an effect on the ecosystem by slowing down investor curiosity in crypto as an asset class. However, Jun famous that this can solely be a short-term impact. In the long run, the trade CEO defined that cryptos like Bitcoin’s (BTC) demand as a hedge in opposition to fiat inflation will develop together with the arrival of latest functions for blockchain.
“In the long term, demand for cryptocurrencies as a hedge against fiat inflation will continue to grow, as well as for applications of blockchain technology.”
When asked about critics who are using the Terra collapse as an opportunity to take a dig at the entire crypto market, Jun highlighted that crashes like Terra also happen in many other industries.
“Market crashes and coordinated attacks are not unique to crypto,” stated Jun. Citing the Lehman Brothers collapse and the housing market crash, Jun talked about that “each trade will see its justifiable share of toppled gamers.” He additional defined that the long-term endurance of an trade at all times will depend on the demand for its providers.
“Crypto as a technology and asset class introduces value and innovation that is unique and irreplaceable, and we believe that one bad apple in the short run will not affect long-term demand for crypto assets and the industry as a whole.”
Jun can also be optimistic and believes that when the worth of BTC recovers, confidence available in the market will return and it’ll result in extra investments coming into the house. Despite the bumps within the highway, the CEO trusts that the broader crypto trade will develop constantly.
Related: US congress analysis company weighs in on UST crash, notes gaps in regulation
Also, Jun famous that there are flaws uncovered by the Terra crash. “The takeaway is that in the future, stablecoins should be backed by less volatile tokens,” he stated. He underscored that collateral should be “rebalanced with less volatile tokens.”
Lastly, the Huobi Global CEO stated that in abstract, “decentralized stablecoins are vital to the development of the entire cryptocurrency ecosystem.” He shared that the neighborhood can flip this loss right into a win by innovating in order that tragic incidents just like the Terra crash don’t repeat.
Earlier this month, the UST greenback peg crumbled as a whale began to dump UST. This lowered LUNA’s value by 20% solely someday after the preliminary dump. The occasion then snowballed at the same time as Terra founder Do Kwon shared plans for Terra’s restoration. In the tip, the Terra debacle turned one of many greatest value meltdowns within the historical past of crypto.