Sonic Labs and Andre Cronje Hint at the Launch of High-Yield Algorithmic Stablecoin
Co-founder Andre Cronje of Sonic Labs and DeFi project Yearn Finance hinted at the release of a high-yield algorithmic stablecoin. In a post on X, he stated that the stablecoin could be released within 4 to 5 weeks. On March 20, he and his team shared this process on Twitter, indicating that work is underway using the algorithmic stablecoin. At that time, he added that the failures of previous algorithmic stablecoins, particularly Terra UST, had given him PTSD, and he was uncertain about implementing the idea.
He stated:
“It’s safe to say our team has broken stablecoin today, but the previous cycles have given me too much PTSD to be certain we should implement.”
Despite his concerns, Cronje mentioned that the stablecoin would soon be ready. He further shared projections for the stablecoin’s annual percentage yield (APY). With a total value locked (TVL) of $10 million, it would generate a 200% APY, while an APR of 23.5% would be expected. A $1 billion TVL would yield 4.9% APY. This potential yield has increased following recent developments.
He added:
“@yjn58 just found a way to turn it into a 95.9% APY, with $100 million TVL, for 19.18% on $100 million+.”
Although Cronje shared the potential yields the stablecoin might generate, he did not provide any details about the project’s technical aspects, such as collateral, on-chain control, or algorithmic mechanisms. Nevertheless, the new project is set apart from other DeFi projects. His statement on March 22 mentioned plans to “scale up and let the team fully release.”
Attention is being paid to tracking the potential Algo Stablecoin as a reference point for many, including UST.
Meanwhile, the crypto community’s response to the new algorithmic stablecoin plan has been largely negative, with many pointing out that it evokes memories of the failed Terra UST. The $40 billion crash of UST in 2022 was the first domino that led to the ultimate collapse of the cryptocurrency market, resulting in the bankruptcy of many companies. Despite the market’s recovery, the idea of another algorithmic stablecoin has led many to compare the two events. Unsurprisingly, numerous comments from X users suggested that Cronje should not lead this initiative to prevent another situation where someone ends up in jail. One user even suggested naming it the Anchor Protocol, which was behind UST’s adoption.
Michael Egorov, founder of Curve Finance, also suggested that Cronje rename his project ‘Cron,’ referencing the founder of Terra UST, who has been convicted and faces further criminal charges in the U.S. The failure of UST has also prompted many regulatory bodies to oppose algorithmic stablecoins.
Despite these concerns, some believe this is a good idea and that it would boost DeFi activity on the Sonic network. Since rebranding from Fantom to Sonic, the Layer-1 network has been committed to becoming a foundational layer for DeFi with cost efficiency and speed.
Stablecoins on Sonic Approach $400 Million. Source: Messari
Efforts to attract DeFi instances have proven relatively successful, as the Sonic stablecoin market has experienced significant growth over the past few months. According to data from Messari, the market capitalization of Sonic stablecoins is now approaching $400 million, and it could soon rise higher with the influx of native USDC into the network.
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