Sonic blockchain is implementing a yield-generating algorithmic stablecoin offering up to 23% annual percentage rate (APR), despite concerns of a potential collapse like the Terra-Luna incident in May 2022 that wiped out $40 billion in value. Andre Cronje, co-founder of Sonic Labs, noted that the algorithmic stablecoins will utilize code-based mechanisms for price stability, diverging from fiat-pegged options. Cronje expressed mixed feelings about the launch due to his team’s previous experience with algorithmic stablecoins, which caused significant market disruption. The TerraUSD (UST) stablecoin, offering over 20% APY, lost its peg dramatically, coinciding with LUNA's value plummeting over 98%. Meanwhile, the Sonic chain claims to be the fastest Ethereum Virtual Machine (EVM) chain, promising transaction finality in under a second. Despite Terra's collapse, trading volume for LUNA remained over $21 million in the past 24 hours, indicating lingering interest. Regulatory bodies like the European Union have since imposed restrictions on algorithmic stablecoins to prevent reoccurrences of such failures.

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