Sonic Labs shifts focus from USD stablecoin to UAE currency innovation

• Digital Dirham Increases Financial Security
• Preferred Stablecoins for Smaller Transactions
• USD to Dirham Stablecoin Swap

Sonic Labs has decided to abandon its plans to introduce an algorithmic stablecoin pegged to the US dollar, opting instead to develop an alternative backed by the UAE dirham. This strategic decision comes in response to the UAE’s recent announcement that its own central bank digital currency (CBDC) will be ready for launch in the fourth quarter of 2025.

On March 22, Sonic Labs co-founder Andre Cronje revealed the company’s original intention to launch an algorithmic stablecoin pegged to the dollar with an expected return of up to 23% per year. However, just a week after this announcement, the company took a new direction.

“We will no longer launch an algorithmic USD-based stablecoin,” Cronje stated in a post on X on March 28. “Completely unrelated, we will launch a mathematically-pegged numeric Dirham that is settled and denominated in USD, which is definitely not an algorithmic USD-based stablecoin.”

We will no longer be releasing a USD based algorithmic stable coin.

Completely unrelated, we will be releasing a mathematically bound numerical Dirham which is settled and denominated in USD, which is definitely not a USD based algorithmic stable coin. https://t.co/NlLsT5IqoE

— Andre Cronje (@AndreCronjeTech) March 28, 2025

The change of plans follows the United Arab Emirates, which is preparing to introduce its own blockchain-based digital currency. According to Khaled Mohamed Balama, governor of the Central Bank of the United Arab Emirates, the digital dirham is expected to increase financial stability and help combat financial crimes.

Sonic Labs has faced severe criticism over its initial plans for an algorithmic stablecoin, a model that has sparked controversy in the cryptocurrency industry following the collapse of the Terra ecosystem in 2022. Cronje himself has mentioned developing post-traumatic stress disorder (PTSD) due to previous experiences with such a currency.

“I’m pretty sure our team broke algorithmic stablecoins today, but the previous cycle gave me so much PTSD, I’m not sure if we should implement it,” Cronje said, reflecting on the challenges faced.

The Terra ecosystem incident, which saw its algorithmic stablecoin lose value dramatically, still rings a bell for cryptocurrency developers and investors. However, according to David Pakman, managing partner at CoinFund, stablecoins have been increasingly used for smaller, more frequent payments, highlighting a shift in transaction behavior within the crypto space.

At the time of publication, the Sonic price was quoted at $0,4958 with a drop of 10% in the last 24 hours.