At the same time, stablecoins’ prominence in the crypto industry has led to widespread concerns about their so-called stability. In May of 2022, the algorithmic stablecoin project Terra Luna collapsed, leading to losses of billions of dollars in value. There has long been widespread concern about the world’s dominant stablecoin, Tether, which the New York Times called “The Coin that Could Wreck Crypto.” The fear is a run on the bank scenario in which investors en masse try to redeem their stablecoins for dollars, for example, only to find that there are not enough dollars to make them whole.
