Stablecoins are a core part of the financial plumbing when it comes to cryptocurrency and digital assets. They promise that if you put a dollar in, you will always be able to get a dollar out.
But last week saw Terra, one of the largest stablecoins, lose its peg to the dollar and collapse. Investors are estimated to have lost over $40 billion in value. Ouch.
We dig into what happened, what might be the consequences for markets and whether stablecoins present a systemic risk to the economy.
And in the Dumb Question of the Week, we ask “What exactly is a Ponzi scheme?”