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Sonic unveils high-yield algorithmic stablecoin, reigniting Terra-Luna ‘PTSD’
The Sonic blockchain is working on the implementation of its yield-generating, algorithmic stablecoin despite fears over a potential collapse similar to the Terra-Luna meltdown that led to the industry’s longest crypto winter.
Algorithmic stablecoins employ code-based mechanisms to ensure their price stability, as opposed to fiat stablecoins pegged directly to the value of the underlying currency.
The Sonic blockchain is working on the implementation of an algorithmic stablecoin with up to 23% annual percentage rate (APR), according to Andre Cronje, co-founder of Sonic Labs and founder of Yearn.finance.
Cronje wrote in a March 22 X post:
“POC looks good. Yielding > 200% APR @ 10m tvl, around 23.5% APR @ 100m, steady at around 4.9% at 1bn+. Will scale up and get team for a full release.”
Source: Andre Cronje
The announcement came a day after Cronje admitted to experiencing Post-traumatic stress disorder (PTSD) related to algorithmic stablecoin due to previous cycles:
“Pretty sure our team cracked algo stable coins today, but previous cycle gave me so much PTSD not sure if we should implement.”
In May 2022, the $40 billion Terra ecosystem collapsed, erasing tens of billions of dollars of value in a matter of days. Terra’s algorithmic stablecoin, TerraUSD (UST), was yielding an over 20% annual percentage yield (APY) on Anchor Protocol.
As UST lost its dollar peg, crashing to a low of around $0.30, Terraform Labs co-founder Do Kwon took to X to share his rescue plan. At the same time, the value of sister token LUNA, once a top-10 crypto project by market capitalization, plunged over 98% to $0.84. For reference: LUNA was trading north of $120 in early April.
Related: Sonic TVL rises 66% to $253M since rebranding from Fantom
Sonic claims to be the world’s fastest Ethereum Virtual Machine (EVM) chain, with a “true” 720 milliseconds (ms) finality — the assurance that a transaction is irreversible, which happens after it is added to a block on the blockchain ledger.
Sonic has garnered attention in the crypto industry since its testnet achieved a 720 ms finality on Sept. 8, 2024.
Related: FTX liquidated $1.5B in 3AC assets 2 weeks before hedge fund’s collapse
Investors are still buying collapsed LUNA token years after Terra crash
The Terra (LUNA) token is down over 98% from its all-time high of 19.54 recorded on May 28, 2022, nearly three years ago, CoinMarketCap data shows.
LUNA/USD, all-time chart. Source: CoinMarketCap
Despite the collapse, the token saw over $21 million worth of trading volume over the past 24 hours, which shows that “people are still buying it even though it’s dead,” noted popular technical analyst Optimus KevTron.
The collapse of the algorithmic stablecoin issuer created shockwaves among both crypto investors and lawmakers.
To create more stability, the European Union’s Markets in Crypto-Assets Regulation (MiCA) bill will prohibit the issuance of algorithmic stablecoins to avoid another collapse similar to the Terra ecosystem’s.
Magazine: ‘Hong Kong’s FTX’ victims win lawsuit, bankers bash stablecoins: Asia Express
The United States has a 40% chance of a recession in 2025 amid the potential for a protracted trade war and macroeconomic uncertainty, according to market analyst and Coin Bureau founder Nic Puckrin. In an interview with Cointelegraph, the analyst said that while a recession is not probable, a recession and the current macroeconomic uncertainty will create an environment where risk-on assets like cryptocurrencies suffer. Puckrin said: “Trump and his advisors have said they have not completely dismissed the recession, which means it is definitely possible, but right now, I would not say it is probable, but the odds have climbed a lot.” The analyst added that US President Donald Trump is not actively attempting to engineer a recession, but that the things the Trump administration is doing, including cutting federal jobs and spending to balance the budget can lead to recessions as a side effect. Macroeconomic uncertainty is the primary cause of the recent decline in the US Dollar Index (DXY), as investors shift capital to better opportunities in European capital markets and seek an escape from the economic uncertainty currently plaguing US markets, Puckrin told Cointelegraph. The DXY, which tracks the strength of the US dollar, took a nosedive in March 2025. Source: TradingView Related: Timeline: How Trump tariffs dragged Bitcoin below $80K President Trump’s tariffs on US trading partners sent a shockwave through the crypto markets, leading to a steep decline in altcoin prices and a 24% correction in Bitcoin’s (BTC) price from the Jan. 20 high of over $109,000. The tariffs and fears of a prolonged trade war also reoriented market sentiment toward extreme fear — a sharp contrast from the euphoric highs felt after the re-election of Donald Trump in the United States in November 2025 and the January 20 inauguration. The price of Bitcoin has been struggling amid the trade war headlines and is currently trading below its 200-day exponential moving average (EMA). Source: TradingView According to Nansen research analyst Nicolai Sondergaard, crypto markets will feel the pressure of tariffs until April 2025. If countries can successfully negotiate an end to the tariffs or the Trump administration softens its stance then markets will recover, the analyst added. 10x Research founder Markus Thielen recently said that BTC formed a price bottom in March 2025, as US President Donald Trump softened the rhetoric around trade tariffs — signaling a potential price reversal. Magazine: Bitcoiners are ‘all in’ on Trump since Bitcoin ’24, but it’s getting risky Sonic Labs has canceled plans to launch a US dollar-pegged algorithmic stablecoin, opting instead to develop a United Arab Emirates dirham-denominated alternative. On March 22, Sonic Labs co-founder Andre Cronje said the company was working on a US dollar-pegged algorithmic stablecoin with an annual percentage rate (APR) of up to 23%, Cointelegraph reported. However, one week later, the firm reversed course. “We will no longer be releasing a USD based algorithmic stable coin,” Cronje said in a March 28 X post. “Completely unrelated, we will be releasing a mathematically bound numerical Dirham which is settled and denominated in USD, which is definitely not a USD based algorithmic stable coin.” The shift in strategy comes shortly after the UAE announced it would launch its digital dirham central bank digital currency (CBDC) in the fourth quarter of 2025. Source: Andre Cronje Khaled Mohamed Balama, governor of the Central Bank of the UAE, said the blockchain-based dirham could enhance financial stability and help combat financial crime. The digital currency will be accepted alongside its physical counterpart in all payment channels, according to a report from the Khaleej Times. Related: Paolo Ardoino: Competitors and politicians intend to ‘kill Tether’ The reversal follows widespread criticism of Sonic’s original plan to launch an algorithmic stablecoin — a model that has raised concerns across the crypto industry since the collapse of the Terra ecosystem in 2022. Cronje himself previously admitted to experiencing Post-traumatic stress disorder (PTSD) related to algorithmic stablecoin due to previous cycles: “Pretty sure our team cracked algo stable coins today, but previous cycle gave me so much PTSD not sure if we should implement.” In May 2022, the $40 billion Terra ecosystem collapsed, erasing tens of billions of dollars of value in a matter of days. Terra’s algorithmic stablecoin, TerraUSD (UST), had been yielding an over 20% annual percentage yield (APY) on Anchor Protocol prior to its collapse. As UST lost its dollar peg, crashing to a low of around $0.30, Terraform Labs co-founder Do Kwon took to X (then Twitter) to share his rescue plan. At the same time, the value of sister token LUNA — once a top 10 crypto project by market capitalization — plunged over 98% to $0.84. LUNA was trading north of $120 in early April 2022. Related: Tether’s US treasury holdings surpass Canada, Taiwan, ranks 7th globally The collapse of the algorithmic stablecoin issuer created shockwaves among both crypto investors and lawmakers. To reduce systemic risk, the European Union’s Markets in Crypto-Assets Regulation (MiCA) bill will prohibit algorithmic stablecoins to avoid another Terra-like failure. Meanwhile, stablecoins are increasingly being used for smaller, everyday payments rather than large transfers, according to CoinFund managing partner David Pakman. “We’ve seen a significant decrease in the size of each stablecoin transaction, which points to the fact that they are being used more as payments and less for large transfers,” Pakman said during Cointelegraph’s Chainreaction live show on X on March 27. Magazine: Ripple says SEC lawsuit ‘over,’ Trump at DAS, and more: Hodler’s Digest, March 16 – 22 Billionaire investor Elon Musk has sold his social media platform X to his AI startup xAI, sparking controversy as it coincides with a US judge rejecting his bid to dismiss a lawsuit tied to the social media platform. The transfer of ownership of X to xAI on March 28 means that the class-action lawsuit against Musk — accusing him of defrauding former Twitter shareholders by delaying the disclosure of his initial investment in the social media platform — has become “a whole lot spicer,” Cinneamhain Ventures partner Adam Cochran said in a March 28 X post. On the same day that Musk said “xAI has acquired X in an all-stock transaction,” a US judge reportedly rejected Musk’s attempt to dismiss the lawsuit. Cochran said it has “opened up his AI entity to exposure here too, and it’s a much bigger pie.” Source: Grok Musk said the deal values xAI at $80 billion and X at $33 billion, factoring in $12 billion in debt from the $45 billion valuation. He originally bought X, formerly Twitter, for around $44 billion in April 2022. “xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent,” Musk said. Source: Bryan Rosenblatt “This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach,” he said, adding: “This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress.” However, Cochran claimed that “Musk used his pumped up xAI stock to pay multiple times over value for X, but still take an $11B loss on the transaction.” He said that Musk is “screwing over xAI investors, and X investors” and was executed to sell user data to xAI. Related: Elon Musk’s ‘government efficiency’ team turns its sights to SEC — Report xAI is best known for its AI chatbot “Grok” which is built into the X platform. When Musk released it in November 2023, he claimed it could outperform OpenAI’s first iteration of ChatGPT in several academic tests. Source: Raoul Pal Musk explained at the time that the motivation behind building Grok was to create AI tools equipped to assist humanity by empowering research and innovation. While Cochran said that Grok’s valuation at $80 billion is an “insanely dumb valuation,” crypto developer “Keef” disagrees. Keef said, “This is shady all around, but given the day, Grok is genuinely probably the top model for various tasks.” Magazine: Arbitrum co-founder skeptical of move to based and native rollups: Steven Goldfeder Arthur Hayes, Murad’s Prediction For Meme Coins, AI & DeFi Coins For 2025 Expert Sees Bitcoin Dipping To $50K While Bullish Signs Persist Aptos Leverages Chainlink To Enhance Scalability and Data Access Bitcoin Could Rally to $80,000 on the Eve of US Elections Sonic Now ‘Golden Standard’ of Layer-2s After Scaling Transactions to 16,000+ per Second, Says Andre Cronje Institutional Investors Go All In on Crypto as 57% Plan to Boost Allocations as Bull Run Heats Up, Sygnum Survey Reveals Crypto’s Big Trump Gamble Is Risky Ripple-SEC Case Ends, But These 3 Rivals Could Jump 500x
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Trade war fears drag the price of Bitcoin down
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Sonic faced criticism over stablecoin plans
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Acquisition may open xAI up to more “exposure”
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