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In a new interview with Yahoo Finance's Zack Guzman, Terraform Labs Co-Founder Do Kwon explains why this is a crucial time in crypto, noting efforts to create a "decentralized economy."
ZACK GUZMAN: Yeah, for those that might not know, let's talk a little bit more about what Terra does, because it's pretty important in the crypto world. As we've discussed before, there are a lot of people talking about stablecoins. Of course, the two largest, Tether and USDC, are backed by real assets-- most of them cash.
When you look at LUNA and UST, your guys' stablecoin, though, it's growing six times as fast as Tether has this year, and it's backed, not by real assets, but by your cryptocurrency itself, LUNA. So talk to me about what that means in terms of detaching DeFi from the need for stablecoins that actually touch the banking system directly.
DO KWON: Sure. So we're actually at a really important time both in crypto and in traditional finance, whereby we're trying to create a decentralized economy that is difficult to censor and politicize. And it turns out that you get a lot of advantages in terms of being able to structure transactions and contracts between peer to peer intermediaries when these are unfettered by, you know, rules, a lot of which can be politicized by, you know, powers that be.
And for a lot of these innovations that are core to DeFi, such as decentralized exchanges, lending protocols, you know, Synthetix and all sorts of others, it is crucial that a decentralized economy, and these decentralized apps, depend on decentralized money. And that is essentially sort of the core thesis behind what Terra is working on, in the sense that we have these stablecoins that are pegged to various different fiat currencies, such as the US dollar, the Korean won, the SGD, and so on and so forth, that are entirely decentralized and cannot be censored.
So this-- you know, on top of these things, we have applications such as Anchor, whereby stablecoins can be deposited into smart contracts, and they can be leveraged to tap into the power of staking yields that are coming in from multiple blockchains to power, you know, a 19.5% yield on Terra stablecoins, which is the best-- best risk adjusted yield that you can get on any stablecoin in the market.