The Cryptocurrency That Promised Stability and Delivered Chaos

Описание: This analysis examines how algorithmic stablecoins, designed to maintain price stability through mathematical mechanisms without centralized control, systematically failed due to fundamental flaws in their game theory assumptions and crisis response capabilities. We explore the Terra Luna/UST collapse and other failures that revealed how purely algorithmic approaches to monetary stability can create rather than solve systemic risks in decentralized financial systems.
The video investigates three major unintended consequences: the creation of new forms of systemic risk that propagated through DeFi ecosystems, the facilitation of regulatory arbitrage that avoided traditional oversight while performing monetary functions, and the enabling of capital flight that could undermine traditional monetary policy frameworks.
Drawing from the Terra ecosystem's death spiral mechanics, Iron Finance's early collapse, and Anchor protocol's unsustainable incentives, we analyze how rational expectations assumptions broke down under real market psychology and liquidity constraints. The result was mathematical elegance that proved unable to substitute for institutional credibility and crisis response mechanisms that traditional monetary systems provide.