Sonic Labs decided to cancel plans for a USD-pegged algorithmic stablecoin and instead focus on a project oriented towards the UAE dirham.
Sonic Labs Shifts to UAE Dirham
The strategic shift of Sonic Labs aligns with UAE's announcement of a state digital currency - the digital dirham. The initiative aims at enhancing financial stability and combating financial crimes.
Criticism and Past Experiences
The change in plans comes amid criticism over the instability of algorithmic stablecoins, especially after the Terra ecosystem collapse in 2022. Andre Cronje, co-founder of Sonic Labs, admitted experiencing PTSD due to such experiences.
Impact on Market and Legislators
The collapse of algorithmic stablecoins like TerraUSD led to widespread concern among investors and legislators, prompting regulation efforts to reduce systemic risks. This is exemplified by the MiCA bill in the European Union.
Sonic Labs' decision to withdraw from an algorithmic stablecoin underscores the importance of stability and regulation in the crypto market. Such changes are expected to increase trust in digital currencies.
