LUNA, UST, and the fall of Terra
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
$93,506.00
5.80%$1,797.92
13.50%$2.22
6.89%$617.78
2.86%$150.84
8.09%$0.999871
-0.00%$0.18173
12.52%$0.693684
10.72%$0.24781
0.46%$1,796.17
13.49%$93,507.00
5.82%$22.62
13.66%$2.88
28.06%$14.54
10.80%$9.06
-1.33%$0.267702
8.98%$0.00001378
11.15%$3.12
6.47%$0.182904
6.58%$2,167.67
14.43%$0.999851
0.01%$361.20
4.28%$84.22
6.98%$19.04
3.22%$4.07
8.62%$4.67
5.36%$1.002
0.30%$1,807.20
14.43%$1.00
0.09%$0.653459
3.23%$227.39
5.55%$28.46
0.53%$1,924.39
14.37%$0.00000909
14.18%$93,677.00
6.00%$5.95
13.22%$5.32
10.25%$52.53
3.21%$2.47
13.04%$0.941512
10.41%$24.10
4.11%$335.15
5.04%$5.20
10.61%$32.91
0.86%$16.88
8.99%$0.093093
13.34%$0.097047
8.12%$1.048
0.00%$1.00
0.00%$163.41
13.04%$0.707047
6.99%$4.55
4.64%$0.02610122
11.54%$1.17
0.12%$4.37
8.39%$93,238.00
5.52%$0.220716
5.97%$0.340419
18.92%$9.38
12.36%$0.215081
12.94%$4.23
0.03%$2.73
8.22%$2.83
12.50%$0.521469
13.01%$0.634994
7.61%$0.999054
0.08%$0.329538
11.16%$4.12
5.18%$93,491.00
5.86%$10.30
4.71%$0.449025
12.29%$158.16
8.52%$0.758292
9.48%$1,494.96
10.76%$0.0000158
26.12%$0.800739
6.73%$0.076791
6.71%$0.656792
41.62%$1.17
15.64%$0.867388
12.57%$1,801.38
13.70%$1.065
2.96%$0.01675181
4.16%$1,874.07
13.82%$70.52
5.65%$0.675556
6.96%$3.74
3.89%$0.196094
11.22%$9.40
10.75%$1.001
0.09%$0.681242
13.34%$15.72
8.04%$0.999653
-0.04%$0.09125
10.23%$2,025.78
13.75%$1.002
0.23%$3,347.17
-5.01%$1.00
0.03%$618.42
3.02%$92,967.00
7.40%$0.01644745
16.34%$3,345.70
-4.64%$2.67
15.13%$193.99
8.18%$0.01705664
7.47%$93,537.00
6.12%$166.45
8.14%$0.811313
15.28%$0.296939
9.75%$0.193272
15.06%$3.90
13.24%$1,912.15
13.60%$0.118406
6.30%$0.688405
11.69%$0.998078
0.04%$0.667164
2.21%$0.00006786
16.92%$0.01911946
12.17%$0.505148
20.05%$0.00000064
5.35%$93,775.00
4.76%$0.396319
7.17%$0.999123
-0.05%$31.00
6.83%$2.06
6.60%$1.89
11.61%$1.11
1.79%$0.24245
8.73%$0.311091
3.69%$0.00629199
14.41%$3.55
8.48%$1,888.85
14.31%$0.156428
10.22%$0.544845
8.65%$16.96
13.99%$0.550453
27.90%$0.559182
9.40%$33.10
6.11%$0.559368
29.22%$0.786294
37.56%$0.00881964
6.69%$0.998723
0.01%$0.642934
10.28%$0.196441
44.12%$90,650.00
4.39%$0.445426
7.18%$0.067352
-1.16%$93,515.00
5.94%$1.71
6.84%$0.182307
13.26%$1.32
7.47%$0.999789
-0.01%$0.999811
-0.01%$0.04559168
31.81%$1,853.52
12.06%$88,321.00
0.00%$2.13
7.91%$0.007009
40.50%$0.00002212
7.26%$1,801.94
14.12%$15.52
10.88%$0.14835
9.59%$0.00000043
1.20%$110.78
0.01%$93,428.00
5.89%$6.41
15.49%$5.95
9.93%$3.78
8.77%$1.013
1.28%$1.084
-0.00%$0.506439
9.67%$2.52
12.14%$0.077582
8.92%$0.335229
20.47%$0.483861
22.22%$0.04070934
9.80%$1,796.83
13.36%$43.31
9.76%$0.22338
7.13%$1,799.68
13.61%$1,910.99
13.53%$0.082987
8.38%$0.00716042
12.92%$1,799.96
13.63%$0.999261
-0.02%$1.00
0.04%$0.57869
10.72%$21.85
-0.03%$0.843062
9.17%$0.999925
-0.04%$0.00414665
3.01%$0.174918
3.23%$0.0000637
5.25%$0.348208
28.97%$0.0174402
1.07%$1,835.38
14.21%$0.124017
3.48%$1.002
0.23%$1.00
0.07%$0.03185261
2.02%$0.328151
8.70%$2.72
12.36%$93,446.00
5.95%$0.00000147
15.95%$115.16
10.65%$3.70
7.81%$0.653069
19.35%$0.999389
-0.09%$0.239256
10.18%$0.141604
1.75%$1.18
8.12%$1,786.08
14.36%$0.638503
12.47%$26.04
4.98%$0.283652
21.69%$92,564.00
4.26%$0.668437
-7.20%$0.999575
-0.01%$0.00404302
73.02%$22.47
7.98%$0.274752
6.10%$0.00044995
5.19%$3,187.04
0.00%$1,899.44
13.46%$2.79
1.85%$1,799.78
13.60%$0.188746
8.98%$0.113184
8.56%$22.61
13.51%$0.514601
6.53%$0.03706455
6.46%$0.447004
8.82%$0.00284215
11.05%$0.01271978
8.55%$0.961046
17.86%$0.02947208
6.56%$15.25
10.03%$1.048
15.01%$1,878.57
5.84%$0.731193
10.62%$1,974.31
13.97%$1,965.51
14.45%$0.00
13.03%$0.999822
-0.08%$0.999755
-0.02%$2.23
6.12%$0.235841
20.98%$93,216.00
7.58%In what will surely be a historic week in stablecoin history, Terra’s LUNA, the currency that backs its dollar-pegged stablecoin UST, has slid beneath a dollar at the time of writing.
No, we haven’t got our wires crossed. Terra’s LUNA – the formerly market-leading digital currency that was worth just over $119 in April – is trading at $0.85 at the time of writing.
It’s no ordinary crash, either. It’s in freefall.
Earlier today, LUNA lost 32% of its value in the space of an hour.
The news comes while Terra’s other flagship coin, UST, is trading under $0.40.
Terra entered the blockchain business to make smart algorithmic stablecoins.
Stablecoins are often backed by real-world assets. In the case of Tether and Circle, this means cash and bonds, although Tether’s fidelity to keeping adequate cash reserves has been questioned several times.
Stablecoins are supposed to be fungible with their real-world fiat counterparts. If you want a real dollar, you should be able to trade 1 UST for a greenback anywhere and at any time.
Moreover, Terra hoped to solve the transparency issues of other leading stablecoins by foregoing cash reserves and instead creating LUNA. LUNA is the wellspring of value for Terra’s stablecoins, as for every digital dollar in Terra stablecoins, the equivalent is burned in LUNA. The opposite is also true; users could always swap 1 UST for $1 of LUNA and burn that UST.
Over the past 72 hours, though, this mint-burn-mechanism fell apart.
UST began its tailspin over the weekend, leading to LUNA plummeting an initial 10%.
On Tuesday, a $1.5 billion loan from a Terra-centric non-profit organization called the Luna Foundation Guard (LFG) failed to buoy the stablecoin, which has since bottomed out at $0.30 this morning.
The event has been a catastrophic chapter in crypto history, and one that hasn't missed regulators either.
U.S. Treasury Secretary Janet Yellen pointed to Terra’s collapse as an example of crypto’s risks and another reason why we need stablecoin regulation this year.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.