Following the collapse of the Terra stablecoin last May, another stablecoin concept called “Solid” is underway in the Terra blockchain ecosystem. The stablecoin Solid and its white paper were revealed by Capapult Finance, a decentralized finance (Defi) project, and the idea is dubbed a “soft-pegged stablecoin” built on Terra.
Terra Blockchain Ecosystem to See a New Stablecoin Called Solid
About five months ago, the crypto community experienced some dark days with the stablecoin Terrausd (UST), now calledTerra Classicsd (USTC). Now called Terra Classified (USTC), it has peeled away from $1 parity. Today, USTC trades at $0.03 per unit, and the defunct Terra blockchain ecosystem has migrated to a new network called the Phoenix blockchain.
With the launch of the Terra 2.0 network, the crypto community was introduced to a new native crypto calledTerra (LUNA) 2.0. Following the stablecoin de-pegging incident that wreaked havoc throughout the crypto economy, a defi project called Capapult Finance said it plans to launch a new “soft-pegged stablecoin” “Solid” built on the Terra network. The concept of this stablecoin is revealed in a white paper titled “Solid, a Soft-Pegged Stablecoin on Terra.”
The project’swhite paperdescribes Solid as an “Over-Collateralized and fully decentralized soft-pegged stablecoin on Terra. “Do Unlike the original Terra blockchain white paper, which Kwon co-authored, the authors of the Solid white paper are represented by six alphanumeric characters at two addresses – “0x7183, 3A2k4j.”
The white paper, published on October 19, 2022, emphasizes the need for stable assets in a defi world, but not, according to the authors of the white paper, with fiat-backed stablecoins.” Fiat-backed stablecoins are not under the control of their owners, as demonstrated by the ban on tornado cash,” the white paper points out.The stablecoin paper, hosted on the Capapult Finance website, adds.
Thus, to make blockchain technology more popular, assets need to be as decentralized as possible with minimal volatility. It is becoming clearer every day that decentralized money requires decentralized storable coins.
According to the paper, Solid is minted in a Collateralized Debt Position (CDP) system similar to Makerdao, where users deposit interest-earning collateral to borrow stablecoins. The mechanism is also linked to Capapult Finance’s governance token CAPA, and the project claims to “bring integrity and trust to Web3 and join us on our journey to a fully decentralized ecosystem.”
Solidus or Solid claims to offer low volatility and stability through interest earning collateral held by the Capapult protocol; from the Capapult protocol website, the site claims that applications are “coming soon,” it says. As of this writing, the entire stablecoin economy is valued at $146.44 billion, with the top two stablecoins (USDT & USDC) being Fiat-backed crypto assets. Two of the projects in the stablecoin economy that utilize the CDP method, or overcollateralization method, are Makerdao’s DAI and Tron’s USDD.
It is worth noting that many crypto advocates believe that the beginning of a harsh crypto winter was fueled by the demise of Terra, Terraform Labs executives like Do Kwon, defi lending platforms Some of the blame directed at failed projects like Anchor has further exacerbated the community’s trust in the Terra ecosystem.
Capapult Finance’s website promises that the project will “bring integrity and trust to Web3,” but it will be interesting to see if the crypto community will trust a stablecoin built on a fragmented blockchain ecosystem like Terra It will be interesting to see if the crypto community will trust a stable coin built on a fragmented blockchain ecosystem like Terra.
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