The Dallas Mavericks’ owner and a billionaire investor, Mark Cuban, who is successfully trading with cryptocurrency, including Bitcoin, has asked for the regulation to check and balance the progress of DeFi (decentralized finance). This happened after he put his money into stablecoin based on an algorithm followed by its collapse. At this, Cuban called for the regulations to properly define a stablecoin, as he stated to Bloomberg.
Stablecoin is a digital currency type that is fixed into an asset such as the U.S. dollar. In the previous years, the dollar rates spiked to the sky with having the most increasing value of its stablecoin Tether. Currently, it is expanding the market capitalization to approximately $62 billion.
DeFi is simultaneously utilizing crypto technology for the re-structuring of financial products like insurance and loans without the requirement of a bank. Spanning the last year, this program has got comprehensive fame among the masses by assisting in a surge in the value of Ethereum (a blockchain network providing the basis for most of the DeFi programs)
The stablecoins in DeFi are struggling to hold their fixed values to flat in the matter of currencies by developing an arbitrage for the convenience of the consumers and increasing liquidity among the coins. As these projections are notoriously risky, therefore a lot of projects collapsed recently.
Mark Cuban stated that there should be some management and supervision over the stable coin and to define the acceptability of collateralization. The details about the loss in the project have not been disclosed by Cuban. He added while talking to Bloomberg that the loss was little as it was like his crypto portfolio, but it was enough to make him unhappy. He stated that he got hurt just like the others. Another DeFi investor suggested that Cuban was rugged.
It was revealed by Cuban that his 60% crypto holdings are invested in Bitcoin, whereas 30% are included in Ethereum, leaving 10% in the other coins. In recent days, He started dabbling with the DeFi revealing in a blog post that because of the mostly unregulated technology, the banks should be alarmed.
Paolo Ardoino, the chief technology officer in Bitfinex and Tether Limited, states that there is no equality in the value of all the tokens. Some projects include the risk for everything to go zero. There is a need for education over these financial projects not to invest in something for which you are not ready to lose all.