LUNA’s price drops 86% amid stablecoin UST’s pullback
- May 11, 2022
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On Wednesday, May 11, the Terra ecosystem’s algorithmic stablecoin – TerraUSD (UST) – again lost its peg to the US dollar. According to CoinGecko, the LUNA cryptocurrency used
On Wednesday, May 11, the Terra ecosystem’s algorithmic stablecoin – TerraUSD (UST) – again lost its peg to the US dollar. According to CoinGecko, the LUNA cryptocurrency used to mine it crashed by 76.4%.
Update:
The UST slumped below $0.23. LUNA prices are around $4 (-85.9% over the past day).
At the time of writing, the asset sits at $8.6. On Friday, May 6, the price of the LUNA was over $80. The chart below shows that the current drop was accompanied by an increase in trading volume.
LUNA has not stayed in the top 30 cryptocurrencies by capitalization. It is currently ranked 31st.
On May 8, the UST briefly lost its peg to the US dollar due to the exit of assets from the Anchor protocol as the rate of return on deposit fell to 17.87%.
The Luna Foundation Guard (LFG) provided $750 million in BTC and $750 million in stablecoin loans to OTC firms to maintain “the stability of the UST and the Terra ecosystem as a whole.”
On May 10, the UST was again stable against the dollar – quotes fell below $0.62. On the same day, The Block sources reported that LFG plans to raise $1 billion to offset the stablecoin rate.
According to interlocutors, the organization is seeking funding from “some of the industry’s largest investment firms and market makers.” The publication claims that as part of the deal, it will offer investors to purchase LUNA at a 50% discount.
Prior to that, Terraform Labs head Do Kwon announced his plan to return the stablecoin’s price and stabilizer to $1. At the time of writing, he has yet to reveal details.
close to the announcement of a recovery plan for $UST. Hold tight.
— Do Kwon 🌕 (@stablekwon) 10 May 2022
However, LUNA’s additional issuance and rumors of ~80 million coins did not help stabilize the UST rate. At the time of writing, the price of the asset has moved closer to the $0.3 mark.
The stablecoin’s capitalization dropped by 2 billion coins in four days.
According to Miki Honkasalo, an analyst at The Block Research, LFG’s fundraising attempt “failed.”
A few hours ago, Luna started hearing that her fundraiser was disbanding.
It’s hard to imagine any company risking its reputation in this trash can fire.
Finished.
(His original tweet about this was deleted to avoid jumping the gun, but it looks clear now)
– mhonkasalo (@mhonkasalo) 11 May 2022
“It’s hard to imagine any company risking its reputation by a fire in a trash can. It’s over,” he wrote.
“UST is worse than BitConnect,” said popular analyst Hasu.
UST is worse than Bitconnect.
At least Bitconnect didn’t look like a stablecoin.
A special place in hell is reserved for you when your ponzi targets people’s savings (not investment) portfolios.
Half of CT influencers, VCs and trading firms are complicit.
— Hasu⚡️🤖 (@hasufl) 11 May 2022
“At least BitConnect didn’t look like a stablecoin. If your pyramid scheme is targeting people’s savings (rather than investment), you’ll have a special place in hell for you. Half of influencers, venture capitalists and trading firms are complicit,” he wrote.
Recall that in a recent ForkLog special, he described how Anchor problems could crash the Terra economy and cryptocurrency market.
Source: Fork Log
I’m Sandra Torres, a passionate journalist and content creator. My specialty lies in covering the latest gadgets, trends and tech news for Div Bracket. With over 5 years of experience as a professional writer, I have built up an impressive portfolio of published works that showcase my expertise in this field.
