The cryptocurrency world is an unpredictable place, and nothing has made that clearer than the recent bear market. While many stablecoins has been succeeding, the tale of Basis is unfortunately not one of them. Despite their reputation, they have decided to pull the plug on their project and issue a refund to investors.
During the Basis funding round, the firm managed to bring in $133 million, though the launch of the stablecoin ran into some snags, according to individuals who had direct knowledge of the issue. Since Basis was unable to properly establish the necessary algorithm, Basis has ultimately chosen to shut down. The majority of the capital is being returned, though they had the support of major platforms like Bain Capital Ventures, GV, Andreessen Horowitz, Lightspeed Ventures, and a number of other firms.
So far, there hasn’t been information about which of the many regulatory agencies seems to be putting pressure on the project, and there’s no real reason that these entities would take issue with the business model. Either way, according to a report by The Block, the shutdown of Basis should commence on Wednesday evening.
Stablecoins have largely been the most consistent throughout the bear market. Still, that hasn’t saved them from criticism. Tether, for example, received a lot of negativity for their lack of fiat backing at the 1:1 ratio. Other exchanges have launched stablecoins during this time in hopes of improving trading volume, like Paxos, Circle, and Gemini.
CEO of XBTO Group, Phillippe Bekhazi, already predicted this circumstance, saying that 2019 would be a positive place for stablecoins.
“They can also be used as a mechanism to move value around in stable terms, and technically even for payments, although the speed of the underlying blockchain may be a limiting factor for time-sensitive transactions, for the time being.”
The Block gathered, from multiple sources, that Basis still has a lot of people behind their project, calling it the most accomplished project of their career.
One unnamed, but large, investor said,
“This is an extraordinarily talented team with an extremely ambitious vision tackling a very difficult problem. Though there was no verification of the shutdown from the investor, he added, “Our respect for this team is as high as its ever been.”
The complexity of Basis drew many investors in, though it proved to be too complicated to follow through. They had planned to issue three tokens – basecoin, base bonds, and base shares. Basecoin was to be “the cryptocurrency that powers the system.” Base bonds were meant for auctioning, though The Block didn’t provide additional details about base shares.
Even though the algorithmic model was believed to be an innovative and revolutionary step in cryptocurrency, it proved to be impossible to follow through. Ultimately, as The Block wrote, it “was no match for the US government.”