Just two months ago, Do Kwon, the founder of the Terra blockchain, tweeted to his followers that DAI, a five-year-old stablecoin, would fall victim to Terra's fast-growing stablecoin, UST.
This week, it is UST, not DAI, that needs a lifeline.
The algorithmic stablecoin hosted by Terra Network has lost its dollar peg twice this week, falling as low as 23 cents on Wednesday. As a stablecoin, UST's price is supposed to always maintain a value of $1.
Due to this price drop, DAI, which is based on the Ethereum blockchain, briefly overtook UST as the largest stablecoin by market cap based on a decentralized financial protocol (DeFi) and the fourth largest of all stablecoins.
DAI, which is managed by decentralized financial protocol MakerDAO, currently has a market cap of $7.54 billion (with a price clinging to the $1 mark), while UST was briefly at $6.43 billion on Wednesday, according to data from Messari, before rebounding to $12.9 billion in the afternoon.
But there is still a long way to go before the algorithmic stablecoin reaches its original market cap of around $18 billion, which it had before the crash three days ago.
In the meantime, the schadenfreude on Twitter on Wednesday was unmistakable:
Representatives for Do Kwon did not respond to a request for comment by press time.
DAI is a stablecoin pegged to the dollar, meaning its value is backed by dollars, as opposed to an on-chain mint-and-burn mechanism. But both stablecoins work with decentralized financial protocols (DeFi), which is why they are often compared.
DAI is managed by MakerDAO.
Do Kwon said he was working to bring the UST stablecoin back to a $1 value, tweeting early Wednesday that he was working to "rebuild" UST. At press time, the price was at 58 cents, still down 33% in the last 24 hours.
On Wednesday, "Do Kwon" was the talk of the town on Twitter. Here is an excerpt from the reactions: