One lesser known fact about the recent price collapse of algorithmic stablecoin TerraUSD ($USST) is that it managed to hit some of the most vulnerable people on the planet, namely relatively poor people living in high inflation countries.
According to a report published on May 26 by tech news out “Rest of the World”, people in countries such as Argentina , Venezuela, and Nigeria found the “apparent security of stablecoins” very attractive to people when it came to deciding what to do with their meagre savings.
The report claims that $LUNA and $UST crash “shattered that illusion.” One of the many people that the authors of the report interviewed was a 47-year-old Agrentinian woman named Valeria, who “makes around $300 a month selling prepared food from her home in Buenos Aires.”
Apparently, she was “nervous about keeping the money saved in Argentine pesos because of the country’s inflation rate, which passed an annualized 50% earlier this year.” Therefore, she “put more than $1,000 — all her savings, plus $500 her friend lent her to buy a new refrigerator — into TerraUSD (UST), a cryptocurrency stablecoin that was advertised as being pegged 1-to-1 with the U.S. dollar.”
The report went on to say:
“Valeria had spent months learning about UST before starting to invest in various protocols about four months ago. In mid-May, the stablecoin lost its peg, meaning that its value diverged from that of the dollar, and its price plunged to mere cents. Valeria watched her savings dwindle to zero, unable to remove the money from the protocols, which had blocked withdrawals.“
Pablo Sabbatella, director at Argentinian crypto education startup Defy Education told the news outlet:
“A lot of people that are not deep into crypto started using stablecoins as a way of saving money because you cannot buy [U.S.] dollars legally [in Argentina].” He also told them that the Central Bank of the Argentine Republic (BCRA) banned the country’s residents “from buying dollars for the purpose of saving in 2012, with the aim of protecting its foreign reserves.”
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