According to CoinDesk, Terraform Labs CEO Do Kwon was one of the co-founders of the failed Basis Cash algorithmic steblecoin.
Basis Cash (BAC) was launched on the Ethereum network in late 2020, shortly before the launch of Terra TerraUSD (UST), the ecosystem’s flagship steblecoin. As with UST, BAC sought to maintain a $ 1 peg via code rather than collateral.
The failed project token never reached its goal of parity to the dollar and fell below $1 in early 2021. Now history is repeating itself: UST has plummeted to 27 cents in the last three days. The cancellation of the UST peg has shocked cryptocurrency markets and regulators alike.
Former Terraform Labs engineer Hyunsuk Kang said Basis Cash was a side project of Terra’s early creators, including himself and Kwon. Kang eventually left the company to create a Terra competitor called Standard Protocol.
Basis Cash never reached the heights of other Kwon-related crypto projects. Its total locked-in value (TVL) briefly peaked at $174 million in February 2021, times Terra’s TVL of $30 billion before this week’s sale.
CoinDesk sources say that Kwon deliberately distanced himself from the day-to-day operations of the failed project, even though most of the basic ideas behind Basis Cash came from him.
Basis Cash, one of the first examples of an algorithmic steblecoin to be tested in a real-world setting, never found a solid footing. Game theory and smart contracts were supposed to regulate BAC’s supply to keep it trading at $1, but the token never managed to hold a peg to the dollar.
The CoinDesk editorial board believes that in this volatile situation, investors should be aware that UST is not Kwon’s first attempt to create an efficient algorithmic stackablecoin.