For Cuban, one of the most important things in selecting a blockchain project is the implementation of smart contracts. Mark Cuban has called for stablecoin regulation in the wake of the TITAN collapse, telling Bloomberg in an email: вЂњThere should be regulation to define what a stable coin is and what collateralization is acceptable.Speaking to CNBC, the billionaire revealed a few of his secrets behind comparing different blockchain projects. Kwon adds the challenge for algorithmic stablecoin developers is building sustainable use cases around the stablecoins and вЂњstability will increase as these use cases become more sticky, distributed and uncorrelated.вЂќ вЂњThis leads to a feedback loop where capital flight compresses both the value of stablecoins and the holding yield, increasing both principal risk and lowering returns to compensate. That is: If you hold the stablecoin, we will let you farm more stablecoins,вЂќ Kwon tweeted. вЂњNew algo stablecoins have all failed because they solely rely on recursive holding incentives for growth. This caused a negative feedback loop, as more TITAN was created (as a result of IRON redemptions) and the price kept going down.вЂќДo Kwon, founder and CEO of Terraform Labs, which created Terra, an algorithmic stablecoin project wondered on Twitter: вЂњSo why have they failed? Is algorithmic stability too hard?вЂќ Because of how the 10mins TWAP oracle works, TITAN spot price drops even further in comparison to the TWAP redemption price. This time, after they started, a lot of users panicked and started to redeem IRON and sell their TITAN. UTC, вЂњa few big holders started selling again.

TITAN dropped from 65$ to 30$ in 2 hours, which later recovered in 1 hour to 52$ and IRON fully recovered its peg.вЂќ UTC: Iron Finance вЂњnoticed some whales began to remove liquidity from IRON/USDC, then sold TITAN to IRON and then IRON to USDC directly to liquidity pools instead of redeeming IRON, which caused the IRON price off-peg. Iron Finance says the crash was not a rug pull - a malicious tactic where crypto developers abandon the project and run away with investorsвЂ™ money - but poor tokenomics resulting in вЂњthe worldвЂ™s first large-scale crypto bank run.вЂќ The project detailed the sequence of events that unfolded in a post-mortem blog post: The price of IRON has dropped from its US$1 peg and is now trading for just US$0.77 as of publishing time, according to CoinGecko. Basically, the price of TITAN goes up when new IRON tokens are minted, and the peg becomes less stable when the price of TITAN falls, like what unfortunately happened on June 16.

In the case of Iron Finance, USDC and TITAN were used as collateral on Polygon and BUSD and STEEL on the Binance Smart Chain. Then there are algorithmic stablecoins like Iron that have a multi-token collateral mechanism using time-locked smart contracts to maintain price stability. Others, like Dai, are backed by crypto assets. Some stablecoins like USDC say they are 100% fiat-backed, while others, like USDT, are backed by a basket of assets - including unsecured debt - with cash only as a tiny portion. They act as a bridge between traditional finance and crypto and allow traders to stay in the crypto ecosystem when hedging against price declines. Stablecoins, which are typically pegged 1:1 to fiat currency, are cryptocurrencies that are designed to minimize price volatility. dollar, on the Polygon network and Binance Smart Chain, according to its website. Iron is a partially collateralized stablecoin, soft-pegged to the U.S. How did Iron Finance investors, even a supposedly savvy one like Cuban вЂњget rekt,вЂќ in crypto parlance - suffer a heavy financial loss caused by a wrong trade or investment. Like #TITAN, more and more cryptos will bite the dust and reveal that they are nothing more than highly speculative assets with fundamental values of ZERO!вЂќД«efore Titan tokenвЂ™s dramatic collapse, Iron was seeing exponential growth in total value locked, rising from US$30 million on May 20 to US$1.2 billion on June 12.

Earlier, Hanke had tweeted: вЂњ#DeFi tokens are the latest cryptos to take a nose dive. I made money in one and then lost money during the bank run on the a second,вЂќ said Cuban in another tweet replying to American economist Steve Hanke. Crazy part is I got out, thought they were increasing their enough. Price volatility is the norm in crypto markets, but last week saw the price of decentralized finance (DeFi) project Iron FinanceвЂ™s Titanium (TITAN) token plummeting - from US$64.19 to zero - in a single day.Д®ven American billionaire investor Mark Cuban - who had endorsed TITAN in a blog post just days before - was not left unscathed by the tokenвЂ™s crash, taking to Twitter to say вЂњI got hit like everyone else.

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