One more dollar-pegged stablecoin weakens, This time on Solana. Because of their steady pricing, stablecoins are typically ineffective as investments. Their frequent usage is for financial transactions, such as sending and receiving money.
The hack was initially validated by the crypto analytics company Packshield. The attacker obtained a $13.5 million profit in ANA via a $10 million USDC quick loan. The value of ANA and NIRV later fell as a result of this quick attack. The hacker that took advantage of Nirvana’s mechanism was drawn to it since it is the first native computing stable currency project on the Solana chain and uses a dual-currency system. The value of its currencies, ANA and NIRV, is rapidly approaching zero.
This hack caused ANA to lose over 83 percent of its value in 24 hours, dropping from over $8 just a few days before to trade at $0.85, while Nirvana’s dollar-pegged stablecoin NIRV debugged and fell by more than 90 percent, trading at less than a penny in the past.
Stablecoins: are they good? What’s next for Solana?
Stablecoins are the “happy medium” that combines the benefits of decentralized virtual currencies with the stability of fiat currency. They are digital currencies with preset values, frequently another currency. Tether (USDT), whose value is 1 USD, is a well-known example.
Stablecoins are created and managed by a single issuer. Therefore the number of those coins cannot be increased without centralization. As a result, the price of those coins will fluctuate. This is based on the value of the underlying assets, typically with the use of smart contracts. It is presumable that stablecoins are only utilized by investors to satisfy transaction demand. Stablecoins are those anchored to a real-world asset, like the US dollar, as opposed to volatile, floating coins.
Because they frequently offer stability, security, and a consistent value chain, stablecoins are becoming more popular. Stablecoins have a finite supply, so if the price starts to rise more than expected, the issuing body reduces the coin supply, which lowers the price. High liquidity improves the likelihood that prices will rise. This is why the total coin supply liquidates itself. This happens if the value of stablecoins is below the expectation.
Stablecoins have advantages, but unlike other cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), and many others, you cannot profit from owning stablecoins as an investment. Stablecoins like USDT, USDC, and SameUSD are not volatile, as the name “stablecoin” implies, and retain a stable value in contrast to these cryptocurrencies.
This has the advantage that you can use stablecoins as a hedge against market downturns. All you need to do is simply convert your cryptocurrency to stablecoins. You can keep your capital by doing this. The Solana network has been relatively devoid of such controversies.
Crypto specialists reportedly foresaw this tragedy. A lot of people compare it to the TERRA/LUNA catastrophe that happened a while ago. The former price of ANA dropped quickly to the floor price. It subsequently established an agreement between ANA and its investors. This was mostly due to the lack of liquidity. If a hacker returns a stolen fund and accepts a $300,000 bounty, Nirvana Finance is willing to end its inquiry.
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