Sonic Blockchain Continues to Develop an Algorithmic Stablecoin

output: POC looks good. Yielding > 200% APR @ 10m tvl, around 23.5% APR @ 100m, steady at around 4.9% at 1bn+.Will scale up and get team for a full release.

Sonic Blockchain, known for its blazing-fast Ethereum Virtual Machine (EVM) chain boasting transaction finality at 720 milliseconds, is also developing an algorithmic stablecoin. The project, co-founded by Andre Cronje, is aiming to provide an annual yield of over 23% at a $100 million market value.

However, the stablecoin sector has seen turbulence with the 2022 collapse of Terra-Luna cryptocurrencies, leading to the loss of billions and drawing attention from regulators and investors.

Highlighting the enduring effects of the previous crash, Andre Cronje mentioned his PTSD (Post Traumatic Stress Disorder) which remains due to the events of last year.

Nevertheless, Sonic continues to pursue its stablecoin development despite these volatile conditions in the algorithmic stablecoin sector.

Its new stablecoin aims to address the yield appeal that TerraUSD (UST) once promised but with the lessons learned from its predecessor’s downfall.

Some experts recommend caution as the price-stability mechanism of algorithmic stablecoins was a subject of intense investigation following the failure of Terra’s stablecoin.

After gaining huge interest and inflows due to its promise of annual returns over 20%, UST lost its peg to the US dollar in May 2022.

The event triggered a devastating chain reaction that wiped out over $40 billion in value across the Terra ecosystem including its sister token LUNA.

This led to huge losses, and many investors and regulators were on the lookout for such projects in the crypto industry.

But Sonic's project began discussions about algorithmic stablecoins’ future with the aim to provide an annual yield of 23.5% at a $100m market value and 4.9% at $1bn+.

Its Point of Contact (POC) looked promising, showing >200% APR at 10m TVL and 23.5% APR at 100m TVL, Cronje said, adding that they will scale up and get a team for a full release.

He said: "Yielding >200% APR @ 10m tvl, around 23.5% APR @ 100m, steady at around 4.9% at 1bn+.

"Will scale up and get team for a full release."

Algorithmic stablecoins maintain their price stability through code-based mechanisms that differ from those used in fiat-backed stablecoins.

These stablecoins are typically pegged to the US dollar, aiming to keep their value stable.

However, the Terra-Luna collapse, which unfolded in early 2023, highlighted the risks associated with such coins and led to a ban on their sale in the European Union.

The new Markets in Crypto-Assets Regulation (MiCA) bill, which is set to be launched this week, will ban the sale of algorithmically stablecoins.

The regulation, which is expected to come into effect in 18 months, raises more questions about the stability and reliability of such financial instruments.

The news comes as Fantom announced a rebranding to Sonic Network, showcasing its progress in technological advancements.

Sonic Network, now the fastest Ethereum Virtual Machine (EVM) chain in the world, has reached transaction finality at 720 milliseconds.

Its speed improvement led to a 66% growth in total value locked (TVL), which currently stands at $253 million.

However, the platform continues to face regulations, especially from the European Union.

The new MiCA bill, which is set to be launched this week, will ban the sale of algorithmically stablecoins.

The regulation, which is expected to come into effect in 18 months, raises more questions about the stability and reliability of such financial instruments.

The Terra-Luna collapse marks a pivotal moment in cryptocurrency history as it affects investors' behavior toward these markets.

For instance, trading activity persists for LUNA despite its dramatic price decline, which has resulted in more than 98% value loss.

The trading activity for LUNA tokens reached $21 million within a 24-hour, indicating that traders are participating in its near-dead state market.