Catenaa, Wednesday, April 09, 2025- Sonic Labs has abandoned plans to launch a US dollar-pegged algorithmic stablecoin, opting instead to develop a version tied to the UAE Dirham. This abrupt pivot came just a week after co-founder Andre Cronje revealed the firm’s initial plans for a dollar-pegged stablecoin with annual percentage yields of up to 23%.
On March 28, Cronje clarified in a post that Sonic Labs would not release the USD-based algorithmic stablecoin, instead focusing on a “mathematically bound numerical Dirham.” This new digital currency, settled and denominated in USD, will not be an algorithmic stablecoin but will be linked to the UAE Dirham.
The move follows the UAE Central Bank’s announcement that it would launch the Digital Dirham, a blockchain-based central bank digital currency (CBDC), by late 2025. The UAE aims to enhance financial stability and combat illicit activities with the Digital Dirham, which will be accepted across all payment systems.
Sonic’s decision to abandon the algorithmic stablecoin aligns with broader concerns surrounding the viability of algorithmic stablecoins, especially after the collapse of the Terra ecosystem in 2022. The crash of Terra’s algorithmic stablecoin UST and its sister token LUNA prompted widespread skepticism about the stability of such assets.
With growing regulatory scrutiny on stablecoins, particularly in Europe, Sonic Labs’ shift could reflect a strategic pivot toward compliance and greater financial stability.
