A Confession from a Stablecoin Issuer—How We Almost Collapsed in 2025

I’m a co-founder of a certain stablecoin project (code name “Pearl”). In the summer of 2025, we issued an algorithmic stablecoin, pegged to 1 USD, with both government bonds and cryptocurrencies as dual collateral. Everything went smoothly for the first three months, and the market cap climbed to 500 million USD.

September 2025 First Depeg
Because the Federal Reserve suddenly raised interest rates, government bond prices fell, and our collateral shrank. Users began to rush to withdraw, and the stablecoin dropped to 0.97 USD. We urgently injected 30 million USDC to bring it back to 1 USD. The argument inside the company turned into chaos—our CTO said “there’s a flaw in the algorithm,” while the CEO said “it’s a market sentiment problem.”

November 2025 Second Depeg
Trump announced a 50% tariff on imported steel and aluminum, causing global markets to roil. Our crypto collateral (mainly ETH) fell by 15% in a single day, and the stablecoin depegged again to 0.92 USD. This time, we had no money to prop up the market. The CEO made a crazy decision: issue a new coin “Pearl 2.0,” force a 1:1 swap, and invalidate the old coins.

Consequences
The community exploded. Users made posts on Gate Square cursing us as “Ponzi scheme” and “liars,” and someone even filed a police report. We were delisted by the exchanges, and the team disbanded. I hid at home for three months and didn’t dare to go out.

April 2026 Reflection
Now I’m writing an article again on Gate Square, under an anonymous account. I want to say: algorithmic stablecoins are a false proposition. Without 100% fully-backed collateral, without independent audits, and without regulation, in the end they will all collapse. What users need is not “algorithms,” but “transparency.” If you see a stablecoin with an annualized yield of more than 20%, remember my story.

The April challenge, I wrote down my confession under a pen name. Not to whitewash myself, but hoping no one will repeat the same mistakes.

#Gate广场四月发帖挑战