Terrible ex- employee: Do Kwon is behind the failed stablecoin project Basis Cash

Intrigued by the early ideas behind Basis, Do Kwon commissioned a group of employees to “revive” Basecoin, ultimately creating Basis Cash as a way to test the core concepts of an algorithmic stablecoin.

Do Kwon, CEO of Terraform Labs, the development team behind Terra, is one of the anonymous co-founders of the algorithmic stablecoin project Basis Cash, which has failed completely.

Basis Cash (BAC) was launched on Ethereum at the end of 2020, when the entire DeFi market was very hot, and what is even more interesting is that the launch of BAC happened just before the launch of Terra’s flagship stablecoin, TerraUSD (UST). Like UST, BAC seeks to maintain a dollar peg through an algorithm rather than a staking model.

The problem is, BAC failed for a simple reason: the project’s token never hit the dollar peg and fell below $1 in early 2021, trading at just $0.007 at the time of writing. Now, the same thing is repeating itself with UST — which has de-pegged from the dollar peg for the past three days and fell to a low of 27 cents early Wednesday morning.

It’s no exaggeration to say that the “UST dollar decoupling event” shocked the crypto market and regulators, as UST’s market cap was once as high as $15 billion, but now it has started a downward spiral. Of course, for the crypto market, BAC’s market value of about $54.5 million may not have much impact, but UST is different, UST can almost be said to be the “benchmark” of algorithmic stablecoins, so this event is likely to make a lot of Industry watchers feel that algorithmic stablecoins are not viable.

Hyungsuk Kang, a former engineer at Terraform Labs (TFL), said Basis Cash is actually a sub-project of Terra’s early founders, including himself and Do Kwon. Eventually, Hyungsuk Kang left Terraform Labs to build a project called Standard Protocol, which later became a Terra competitor. Hyungsuk Kang further explained: “Basis Cash was not tested, we were not even sure it would be successful at the time, Do Kwon just wanted to test it because he said it was a pilot project.”

Another person, who also spoke on the condition of anonymity to be involved in the construction of the Basis Cash project, also confirmed that Do Kwon and Terraform Labs employees provided support for the BAC project.

Hyungsuk Kang, an anonymous employee, confirmed that Do Kwon is actually BAC’s pseudonym co-founder “Rick Sanchez”, and the project’s internal “Basis Cash Korea (BCK)” chat records also show that Do Kwon refers to himself as “Rick” .

Terrible ex- employee: Do Kwon is behind the failed stablecoin project Basis Cash

(Do Kwon and another Basis Cash co-founder, “Morty,” borrowed both aliases from the animated TV show “Rick and Morty.”)

So far, Do Kwon has not responded to the matter.

Frankly, Basis Cash has never reached similar heights compared to Do Kwon’s other crypto projects, with its total locked volume (TVL) briefly peaking at $174 million in February 2021, compared to Terra’s previous $30 billion locked Inventory is two orders of magnitude lower.

What is Basis Cash?

In fact, Do Kwon and another co-founder were not the first to get involved in Basis Cash and its algorithmic stablecoin project.

An anonymous construction team — mostly Terraform Labs employees — mocked the launch of Basis Cash after an earlier project called Basis (formerly known as Basecoin), according to the chat.

Basis was once a darling of venture capital, and the project managed to raise $133 million in funding before shutting down in 2018 due to regulatory concerns. But according to project founder Nader Al-Naji, there was “no way” for Basis tokens to avoid being designated a security, so the project had to be shut down or face regulatory penalties and fight it in court.

Al-Naji also later founded a controversial cryptocurrency startup under a pseudonym.

However, when the time came to 2020, the “DeFi boom” at that time attracted Do Kwon’s intervention, and Basis’s algorithmic stablecoin ideal continued to float in the stablecoin circle. Do Kwon and other algorithmic stablecoin advocates have long argued that the DeFi market needs a decentralized stablecoin that has no censorship risk or central point of failure. Do Kwon’s ideas stand in stark contrast to Tether’s USD stablecoin USDT, and Circle’s USD stablecoin USDC, both of which use their centralized reserve vaults to maintain stablecoins pegged to $1, at least in theory. .

On August 20, 2020, Do Kwon, who used the pseudonym “Rick” at the time, said in the Basis Cash Telegram channel: ” Guys, does anyone remember what Basis is? It’s one of the ambitious ‘DeFi’ algorithmic stablecoins. One, but was forced to close due to SEC-related regulatory risks, and today we are bringing it back from the grave.”

Hyungsuk Kang and another early TFL engineer also revealed that, intrigued by the early ideas behind Basis, Do Kwon dedicated a group of employees to “revive” the project, eventually creating Basis Cash as a It is a way to test the core concepts of algorithmic stablecoins.

It is reported that while Do Kwon presented most of the core ideas behind Basis Cash and its underlying token model, he would deliberately distance himself from the day-to-day operations of the project. UST relies on the token burn mechanism of its sister coin LUNA, while BAC relies on a similar binding mechanism to maintain its $1 peg.

Not only that, but Do Kwon appears to be a spokesperson for the Basis Cash project under the alias “Rick” on Twitter and other social media forums (though it’s impossible to confirm if anyone else has used the alias “Rick”, but according to Basis Cash One participant, Hyungsuk Kang chats, indicated that Do Kwon did.)

On the official website, Basis Cash describes itself as a “decentralized stablecoin with an algorithmic central bank,” and in a November 2020 interview, “Rick” also shared Basis Cash’s vision — of course, in keeping with the current UST is very similar, he said on Telegram at the time: “In the long term, we look forward to seeing Basis Cash widely used as a stablecoin base layer primitive to create more organic stablecoin assets in many DeFi and business environments. need.”

Is “like researching new things” really good?

As one of the early tested examples of algorithmic stablecoin models, Basis Cash never took hold. The token economy model and smart contracts were supposed to further regulate BAC’s token supply supply and make it always trade at $1, but in the end the token was never successfully pegged to the dollar.

Even when Basis Cash was in trouble, Do Kwon’s main account appeared in the project’s Telegram group from time to time, and no pseudonym was used. It is reported that a user was surprised to find Terra founder Do Kwon in the Basis Cash Telegram group, and asked him why he was there, when he replied – “I like to research new things, especially refurbishment.”

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/terrible-ex-employee-do-kwon-is-behind-the-failed-stablecoin-project-basis-cash/
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