Charles Hoskinson backs algorithmic stablecoins

Founder Cardano Charles Hoskinson called algorithmic stablecoins “the gold standard of the digital age.”

The concept of algorithmic stablecoins is how we get nation states off of fiat currencies. It’s the gold standard of the digital age. Use a deflationary cryptocurrency like bitcoin or ada to collateralize a stable coin that’s use as a national currency.

— Charles Hoskinson (@IOHK_Charles) December 2, 2022

“The concept of algorithmic stablecoins is to disconnect states from fiat currencies. It’s the gold standard of the digital age,” he wrote.

Hoskinson also urged using “a deflationary cryptocurrency such as bitcoin or Cardano to back a stablecoin used as a national currency.”

The proposal unsettled some users. They recalled the crash of the algorithmic stablecoin UST from the Terra ecosystem.

How will ADA backed stable coin prevent the UST-LUNA style fiasco ? I know ADA is fundamentally sound crypto but wanted to hear your thoughts.

— G1 (@sangokris77) December 2, 2022

Algorithmic stablecoins were created as an alternative to time-tested centralized assets like USDT and USDC. The sector is actively developing, but many projects struggle to prove their viability.

In November, Emurgo, the company behind Cardano’s ecosystem, announced a USD-backed stablecoin USDA. Launch on the mainnet is planned for the first quarter of 2023.

Earlier, Coinbase CEO Brian Armstrong noted the potential of inflation-linked stablecoins.

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