The Terra network’s native algorithmic stablecoin TerraUSD (UST) has plummeted more than 45% over the past 24 hours. 

On Wednesday morning it plunged as low as $0.2998, according to data from CoinMarketCap. It’s currently trading around $0.50 per coin, far below its $1 peg. In terms of market value, the stablecoin has shed more than $11 billion since May 9, 2022. 

Today, UST’s market cap is just over $7 billion, making it the fifth-largest stablecoin on the market (a far cry from third place, which it hit back in April).  

UST is one of two key tokens within the Terra network ecosystem.

Rather than being backed by traditional assets (i.e. cash, treasuries, etc) or even cryptocurrencies, Terra's stablecoin had attempted to maintain its peg using a mint-and-burn mechanism in tandem with LUNA, Terra’s native governance and staking token. 

In this arrangement, investors could always swap 1 UST for $1 of LUNA (and, in swapping, destroy that UST, removing it from circulation). Thus, whenever UST fell below its $1 peg, savvy arbitragers could buy the discounted UST and swap it for $1, nabbing a neat profit. 

The buying pressure on UST was expected to re-peg the wavering stablecoin. 

This past week, however, this mechanism has deteriorated. 

UST’s traumatic week

Though today marks the lowest price point UST has fallen to, the stablecoin has been battling since Sunday to recover its $1 peg. At that time, the stablecoin dropped to $0.985. 

The event was nonetheless enough to incite panic in the market, dragging LUNA down 10% at that time. 

 2022 Crypto Crash

Terra's LUNA Plummets by 32% in One Hour

Terra Network's LUNA price has continued to take a beating today as the Terra Network token plummeted 65% in 24 hours. In the last hour of trading alone, LUNA fell by 32%—from $22.96 to $16.95—before slightly rebounding to $17.71, according to CoinMarketCap. LUNA, the native token of the Terra blockchain, was trading at around $65 on May 8. But it began to collapse as Terra's dollar stablecoin, UST, lost its peg. UST dropped to below $0.70 yesterday and has been struggling to get back to parity...

Today, though, LUNA’s plunge appears to know no floor. 

Alongside its stablecoin partner, Terra’s other native token has fallen a whopping 94% over the past week. 

Today, LUNA is trading at around $5.50 after having seen an all-time high of $119 a little more than a month ago.