Another stablecoin named “Solid” is being developed inside the Terra blockchain ecosystem in response to the Terra stablecoin’s demise in May of last year, according to a white paper revealed by the firm. A “soft-pegged stablecoin” based on Terra, the stablecoin Solid, and its white paper was made public by the decentralized finance (defi) initiative Capapult Finance.
New Stablecoin Called Solid to Arrive on the Terra Blockchain Ecosystem
Around five months ago, the stablecoin terrausd (UST), now known as terraclassicusd (USTC), went through some gloomy times as it depegged from its $1 parity. The destroyed Terra blockchain ecosystem was relocated to a new network dubbed the Phoenix blockchain, and USTC is now traded for $0.03 per unit.
The crypto community was introduced to a new local cryptocurrency named Terra (LUNA) 2.0 with the introduction of the Terra 2.0 network. A defi project by the name of Capapult Finance announced that it intends to introduce a new “soft-pegged stablecoin” named “Solid” built on top of the Terra network in response to the stablecoin depegging incident that caused chaos throughout the whole crypto industry. A white paper titled “Solid, a Soft-Pegged Stablecoin on Terra” introduced the stablecoin concept.
Solid is an over-collateralized and completely decentralized soft-pegged stablecoin on Terra, according to the project’s white paper. The writers of the Solid white paper, in contrast to the original Terra blockchain white paper that Do Kwon co-authored, are identified by the six alpha-numeric digits of two addresses, “0x7183, 3A2k4j.”
The white paper’s authors emphasize the necessity for stable assets in the defi world and argue that fiat-backed stablecoins fall short of this demand. The white paper claims that “Fiat-backed stablecoins are not under the owners’ control, as was illustrated by the Tornado Cash prohibition.” On the website of Capapult Finance, the stablecoin’s paper also states:
“Therefore, a minimally volatile, as decentralized as the feasible asset is required for blockchain technology to become more widespread. Every day it becomes clearer that decentralized money requires a decentralized stablecoin.”
According to the document, Solid will be created via a CDP system similar to Makerdao, in which users deposit interest-bearing collateral and borrow the stablecoin. The project promises to “bring honesty and confidence to Web3” and invites everyone to “join us on our road to a completely decentralized ecosystem.” The mechanism also functions in conjunction with Capapult Finance’s governance token CAPA.
Through the interest-earning collateral kept on the Capapult protocol, Solidus or Solid asserts to provide minimal volatility and stability. According to the website, the application will be available soon. The top two stablecoins (USDT & USDC) are fiat-backed digital assets, and the total stablecoin market is valued at $146.44 billion. Makerdao’s DAI and Tron’s USDD are stablecoin initiatives that employ a CDP technique or overcollateralized scheme.
Will Terra recover?
It’s important to note that some crypto advocates think Terra’s downfall sparked the start of the severe crypto winter. The community’s confidence in the Terra ecosystem has been further damaged by some of the charges leveled at Terraform Labs executives like Do Kwon and unsuccessful initiatives like the defi lending platform Anchor.
It would be fascinating to see if the cryptocurrency world trusts a stablecoin based on a broken blockchain environment like Terra, despite the Capapult Finance website’s claims that the project will bring “honesty and confidence to Web3.”