TechFlow News — Ethereum developer Ryan Berckmans tweeted that if we heavily rely on UST's peg at scale, it could eventually threaten the solvency of all Ethereum-based DeFi. UST is an algorithmic stablecoin carrying significant risk of a death spiral. To prevent this spiral, UST uses retail profits to purchase BTC; relies on a cross-chain multisig bridge to Ethereum (similar to the Ronin cross-chain bridge hack); and attempts to integrate its bridged liquidity with other high-quality stablecoins—posing potential death spiral risks to those stablecoins and the broader DeFi ecosystem. For these reasons, Ryan believes UST is harmful to Ethereum. Moreover, it undermines the kind of sustainable growth needed to prove to the world that Ethereum is ready to serve as a global settlement layer.
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