Terra crash not a risk to the broader crypto ecosystem, says Huobi Global co-founder
As the fall of Terra (LUNA) and TerraUSD (UST) may have a noticeable short-term impact on the decision-making of both retail and institutional investors, it doesn’t pose a risk to the larger crypto ecosystem, according to Jun Du, co-founder of Huobi Global.
In an interview with Cointelegraph, Du explained that the collapse of Terra will affect the ecosystem by slowing down investor interest in crypto as an asset class. However, Du noted that this will only be a short-term effect. In the long term, the exchange co-founder explained that crypto like Bitcoin’s (BTC) demand as a hedge against fiat inflation will grow along with the advent of new applications for blockchain:
When asked about critics who are using the Terra collapse as an opportunity to take a dig at the entire crypto market, Du highlighted that crashes like Terra also happen in many other industries.
“Market crashes and coordinated attacks are not unique to crypto,” said Du. Citing the Lehman Brothers collapse and the housing market crash, Du mentioned that “every industry will see its fair share of toppled players.” He further explained that the long-term endurance of an industry always depends on the demand for its services:
Du is also optimistic and believes that when the price of BTC recovers, confidence in the market will return and it will lead to more investments coming into the space. Despite the bumps in the road, the co-founder of Huobi trusts that the broader crypto industry will grow continuously.
Related: US congress research agency weighs in on UST crash, notes gaps in regulation
Also, Du noted that there are flaws exposed by the Terra crash. “The takeaway is that in the future, stablecoins should be backed by less volatile tokens,” he said. He
Read more on cointelegraph.com
