The importance of DYOR: Amidst the LUNA crackdown
There is a certain risk when dealing with crypto. As every article on the internet says about it, one must always do their own research before entering an ever-volatile industry. While it is true that your returns could be astronomical, there’s also truth when we say that it could also be the reason for losing all of your life savings.
DYOR, or Doing You Own Research, is an integral part of every crypto transaction as it will save you and your money time to recover potential losses from performing a trade.
It will also bring you peace of mind knowing that your investments’ possibility of any risks are minimized as you know how the project works and there’s public data that they function legitimately.
However, there’s a degree of doing research that one must perform to fully ensure that the project will deliver what it promises to give. One must go beyond the facts of the project found on the internet and do a comprehensive analysis of how it will perform in the future using the circumstances it surrounds.
The LUNA and UST incident
Just last week, the value of LUNA plummeted in a matter of hours. Its $40 billion market cap was erased as its supply increased tremendously, and the traders continued to panic sell their holdings with the hope of saving what they could save from their money.
UST is the stablecoin accompanied by LUNA. It’s not the typical stablecoin that is backed by the mightly dollar, such as BUSD and USDT, to maintain the $1 sweet spot, but it uses an algorithmic mechanism to maintain the dollar price using its token pair.
With this setup, the value of LUNA is linked with UST. This means that whatever happens with UST, LUNA will be affected no matter how minute it could be. That is why when UST plummeted from $1 to $0.1 and its Bitcoin reserves were not able to save the stablecoin, the LUNA token suffered a 99% loss, which affected all of the long-term holders.
How can DYOR enter into the picture?
The algorithmic stablecoin that is UST is the first of its kind, and it has not yet proven with great detail its success over time. Unlike the typical stablecoin that is backed by USD, there is still a cloud as to its stability, ironically in contrast to the nature of stablecoins.
Users should’ve taken this project a grain of salt before investing, especially those who put their money in beyond what they can afford to lose and not their total life savings.
As stablecoins are essential in the stability of the crypto space, there must not be any space for error for these types of tokens, as it would mean a total collapse of the project and the community as a whole.
While the intention of the team behind the UST and LUNA is without malice in providing a stablecoin for the LUNA ecosystem, safeguards should have been put up to make sure that the coveted stablecoin does not lose its value.
PrivacySwap and the possibility of having its own stablecoin
If ever PrivacySwap will have its very own stablecoin, it will always make sure that it is backed by fiat and not by some algorithm to maintain its $1 price.
It will not make a stablecoin that could potentially plunge in the future due to a lack of precaution and planning, causing irreversible damage to the project and the community.
PrivacySwap will ensure that the community’s money is safe and secure from the volatility of the crypto space using this stablecoin, and the trust of its users will never fade as it is the main consideration of the team in the first place.