Investors Bet on Algorithmic Stablecoins Despite Terra's Shadow as Standard Money Raises $8M

Standard Money, the developer of the BNB Chain-based stablecoin USDsd, has secured an $8 million strategic funding round led by Yzi Labs, with participation from Gate.io, Crypto.com, and Animoca Brands. The capital will accelerate the deployment of USDsd's mainnet, expand liquidity partnerships, and scale global operations. USDsd, a yield-optimizing algorithmic stablecoin modeled after Tether's USDT, aims to maintain a dollar peg through smart contracts and economic incentives, though the sector remains shadowed by the 2022 collapse of TerraUSD (UST).

The funding round underscores renewed investor interest in algorithmic stablecoins, a category historically scrutinized for systemic risks. USDsd's design leverages automated mechanisms to adjust supply based on market demand, a model that faced catastrophic failure when UST lost its peg, triggering the Terra-Luna ecosystem's collapse. Despite these risks, Standard Money's backers-including major crypto infrastructure players-appear confident in its approach, signaling a potential shift in risk tolerance within the sector.

BNB Chain, the blockchain supporting USDsd, has emphasized security amid recent high-profile attacks. Following a $128 million hack targeting Balancer and forked projects, the chain reiterated that its ecosystem remains unaffected but urged developers to heighten vigilance. This context adds urgency to Standard Money's expansion plans, as the company navigates both technological and regulatory challenges in a volatile market.

The funding aligns with broader trends in stablecoin innovation, where algorithmic models compete with reserve-backed alternatives like USDT and USDC. While USDsd's yield-optimization strategy differentiates it, the token's success will hinge on maintaining stability amid market volatility and regulatory scrutiny.