Blockchain and cryptocurrency have revolutionized the way that people store and transmit information online. However, one of the main criticisms of cryptocurrency is that is not asset-backed. This means that its value relies purely on speculation, which can make it volatile and unpredictable. Asset-backed decentralized storage seeks to solve this problem. This makes the value of the token more stable and predictable, which could help mainstream cryptocurrency.
Recently, Züs CEO, Saswata Basu penned an article on How the fall of TerraUSD sent a shockwave through the crypto market in the Korea IT Times. Read the highlights below:
The collapse of TerraUSD and Luna has had wide-ranging repercussions for the crypto market.
The recent collapse of TerraUSD and Luna sent shockwaves through the crypto market. These stablecoins were expected to have a major impact on Defi, but their failure caused some high-profile casualties, such as Arrows Capital, Voyager, and Celcius. It is clear that this debacle has shaken the confidence of both investors and companies in the crypto market. We can only hope that lessons have been learned and measures will be taken to prevent similar disasters from happening again.
The fall of TerraUSD sent a shockwave through the Crypto Market because it was not asset-backed and only had one usage.
The problem with Terra started with its high APR off, which generated a lot of interest at first but then made the Defi proposition unattractive. Terra may have been a buzzword in the DeFi space initially, with its promise of a high annual percentage rate (APR) for users. However, this high APR eventually became the project’s downfall.
A single transaction caused a momentary de-peg of USTC to USD, triggering the collapse.
Ever since its creation, Terra has been pegged to the US dollar. This ensured the stability of the digital currency and helped it gain traction in the market. On May 11, 2022, a single transaction caused a momentary de-peg of USTC to USD. This sudden change instilled fear among Terra users, leading to an immediate collapse of the cryptocurrency. It is a reminder that these markets are still primarily driven by emotions, not rational calculations.
If we go back in history to see a parallel.
If current economic trends continue, it is not a stretch to imagine history repeating itself. In 1933, during the great depression, Americans panicked and rushed to withdraw their money from banks in favor of holding onto gold. This led to the collapse in the value of the dollar and caused widespread distress in the banking system.
We need more usage of cryptocurrency and strong belief among users in its inherent value growth.
Cryptocurrency has been on the rise for a few years now. With more and more people investing in it as an alternative form of currency. And while it may not be accepted everywhere just yet, that is starting to change. What is even more important to the future success of any kind of currency -whether it is traditional or digital- is belief in its worth. In order for cryptocurrency to truly thrive, we need more people using it and valuing it as a legitimate form of currency. Only then we will see continued growth and widespread acceptance.
DeFi should move towards decentralized systems
When it comes to Defi, the focus seems to always be on making gains through an artificially high APR. What if we shifted our focus towards decentralized systems that touch physical or digital assets that consumers already need? Not only would this add real value to DeFi’s potential as a financial tool, but it could also have a major impact on global industries.
It is time to expand DeFi beyond just chasing high APRs and get down to the heart of what decentralization can really do for us.
Pegging decentralized storage to tokens, like Züs (ZCN) allows a digital asset to be tied to storage economies. In a world where cryptocurrencies are constantly fluctuating, it can be difficult to peg a cryptocurrency to one specific asset. That is why asset-backed tokens, like Züs (ZCN), offer an exciting solution. Tying the digital asset to storage economies adds an extra layer of stability. Not only does it give the token a diverse range of resources to draw from, but decentralized storage also helps protect against any potential singular failures or market crashes.
Ensure stability in your portfolio.
It is an intelligent way to ensure stability and diversity in your portfolio. Plus, using decentralized storage tokens supports the growth of those industries and economies, making a win-win situation all around. Ultimately, pegging decentralized storage to ZCN is a savvy move for any crypto investor.
The TerraUSD and Lunca collapse was a wake-up call for the crypto market. We need to start looking at how decentralized storage can be used to create real value. Pegging decentralized storage to tokens like asset-backed ZCN, we can create a more sustainable and reliable digital asset economy. If you would like to learn more about Züs or get involved in its development, please visit our website.