Macro Bytes: Cryptocurrencies

Macro Bytes · May 30, 2022 · 24m

In this episode, our hosts Luke Bartholomew and Paul Diggle discuss the recent collapse of a large crypto asset project, and the knock-on effects on the wider crypto market with Jonathan Hobbs from Finimize.

The key takeaways are:

· The collapse of the algorithmic stablecoin Terra and associated coin Luna was caused by design flaws in its supposed stabilisation mechanism, exposed by a rising rates regime, which invited speculative attack

· The financial challenges involved in maintaining a stablecoin resemble those of maintaining an fx peg, preserving convertibility at par in a money market…