Stablecoins have garnered increasing attention, particularly from traditional financial institutions like Bank of America and Standard Chartered, which are exploring launching their own. Regulatory developments in the US and Europe are providing clearer guidelines for stablecoin use, enhancing confidence among banks and fintechs. While Tether's USDt and USDC dominate the market, over 200 stablecoins exist with various mechanisms, including fiat-collateralized and decentralized options. However, issues of depegging and fraud persist, epitomized by the collapse of TerraUSD (UST) due to unsustainable returns linked to its algorithm and a Ponzi-like structure. This has raised concerns about the risks in using derivatives for stablecoin operations. The article suggests a return to the decentralized principles of Bitcoin, advocating for the development of algorithmic, decentralized stablecoins free from centralized control. Such an evolution could realign the underlying principles of blockchain with the functional stability that users seek in stablecoins.

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