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UST Rebounds From $0.66 Per Coin To $0.93, Crypto Community Assesses Stablecoin’s Damaged Reputation

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UST Rebounds From $0.66 Per Coin To $0.93, Crypto Community Assesses Stablecoin’s Damaged Reputation

On Monday, May 9, 2022, the stablecoin terrausd (UST) lost its parity with the U.S. dollar and dropped to an all-time low of $0.66 per unit. The stablecoin has been one of the most topical discussions in crypto during the past 24 hours, as many have been betting on whether it will fail or recover. However, by 9:15 a.m. (ET) on Tuesday morning, the stablecoin has managed to climb back to $0.934 per unit.

UST Stablecoin Plunged to $0.66 per Unit, Rumors Spread Like Wildfire

The Terra blockchain project has been suffering in recent times, as the network’s native asset LUNA has shed 43.6% against the U.S. dollar during the past 24 hours. Moreover, the stablecoin terrausd (UST) has also been dealing with intense pressure as the token’s value plummeted from $0.99 to a low of $0.66 per unit. On a few exchanges, UST dropped as low as $0.62 per unit during periods of extreme selling. Just before UST dipped $0.09 lower than the $1 peg, Terra’s co-founder Do Kwon told the public that the team was “deploying more capital.”

A-Team is assembling.

— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) May 9, 2022

During the course of Monday evening, the Luna Foundation Guard (LFG) emptied the LFG bitcoin wallet that once held approximately 70,736.37 BTC. Currently, there is zero bitcoin in the wallet as it has been drained dry. The same can be said for the LFG Gnosis safe address, as the ethereum address held $143 million on May 3. Today, the wallet holds $135.58 in ether, and a few other ERC20 tokens with small values. While LFG and Do Kwon told the public on Monday that $1.5 billion in bitcoin and UST would be lent to market makers, the current moves have been less transparent.

The stablecoin UST has been trying to regain strength and has surpassed the $0.90 mark on Tuesday morning (ET).

While UST plunged to $0.66 per unit, a large number of theories swirled around the crypto industry. There have been claims that the multinational hedge fund and financial services company Citadel was involved. Reports further claim that Binance order books had paused during the UST sell-off. For a small period of time, Binance paused LUNA and UST withdrawals. Additionally, there’s been talk of well-known crypto funds bailing out Terra as well, by funneling billions back into the stablecoin’s ecosystem.

“There is a rumor spreading about Jump, Alameda, etc. providing another $2B to ‘bail out’ UST,” theblockcrypto head of research Larry Cermak tweeted on Monday evening. “Whether this rumor is true or not, it makes perfect sense for them to spread. The biggest question here is, even if they can get it to $1 by some miracle, the trust is irreversibly gone.”

After UST Rebounds to $0.93, People Question Trusting the Stablecoin Project, Anchor TVL Slips by 43% in a Single Day

Discussions about people losing trust in LUNA, UST, and Terra, in general, have been littered all over social media. “No matter how this ends, I don’t want people to call UST decentralized again,” the bitcoin advocate Hasu tweeted on Monday. “Even the little collateral backing it has is intransparent and controlled by a single party. Used to perform discretionary open market operations. This is like 10x worse than the Fed,” Hasu added.

😶 $UST stablecoin peg breaking…

Same story as with any central bank trying to defend a currency peg: once the market casts a no confidence vote, your prop-up fund rarely has enough assets to prevent the dam from breaking. pic.twitter.com/x3llQtABmv

— Tuur Demeester (@TuurDemeester) May 9, 2022

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Investor Lyn Alden also made a statement about the Terra disaster after she predicted it could happen last month. “Terra’s multi-billion-dollar algorithmic stablecoin UST blew up today,” Alden said. “Aside from destroying the value of LUNA, they used their bitcoin reserves to try to defend the peg, kind of like a flailing emerging market using its gold reserves to defend its FX.”

During the overnight trading sessions and into the trading sessions on Tuesday morning, UST has been recovering from the losses. So far, terrausd (UST) has managed to climb back to $0.934 per unit, or down 6% from the $1 parity. Terra’s co-founder Do Kwon has not tweeted since saying the ‘A-team’ was deploying capital, even though the co-founder is very well-known for defending his project. At the same time, LFG has also not updated the public since its last tweet, which said it would provide more updates.

Mark my words. The UST failure will be used as evidence by policy makers to regulate stablecoins to death and champion CBDCs.

This is not good.

— Dennis Porter (@Dennis_Porter_) May 10, 2022

In addition to the problems with LUNA’s and UST’s price, the decentralized finance (defi) lending protocol Anchor has shed 43.7% of its total value locked (TVL) during the past 24 hours. At the time of writing, Anchor has a TVL of around $7.22 billion and $95.08 million is Avalanche-based collateral. Anchor was once the third-largest defi protocol, and it has dropped down to the sixth position on Tuesday.

People in tradfi making fun of UST… not realizing their stablecoin also depegged by 8% this year.

— Erik Voorhees (@ErikVoorhees) May 10, 2022

Many wonder what’s going to happen if UST regains its $1 parity with trust in the stablecoin so shaken. Many UST owners could be waiting for the $0.99 area or close to that range, so they can cash out of the stablecoin and move into something else. At $0.934141, UST is closer to the $1 parity, but an investment of 5,000 UST would only equate to $4,670.70 at current prices.

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$1 Parity, Anchor, Anchor TVL, Bail Outs, Binance, Bitcoin Wallet, citadel, Deploying Capital, do kwon, Dollar Peg, Hasu, lfg, LFG wallets, LUNA, LUNA down, luna foundation guard, Lyn Alden, Stablecoin, Stablecoin UST, terra (LUNA), USDC, USDT, UST

What do you think about the Terra project’s issues and the recent UST de-pegging? Let us know what you think about this subject in the comments section below.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Stablecoin Implosion — LUNA And UST Lose Significant Value, Downturn Ripples Across The Crypto Economy

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Stablecoin Implosion — LUNA And UST Lose Significant Value, Downturn Ripples Across The Crypto Economy

During the last few days, the crypto economy has been tumultuous as billions have fled the market in search of safety. The issues with LUNA sparked a significant sell-off as Terra’s native digital asset dropped 97% in value against the U.S. dollar in 24 hours. Terrausd has slipped 67% lower than the $1 parity and was trading at a low of $0.299 per unit at 9:00 a.m. (ET).

Terra’s Native Token LUNA Loses 97%, While UST Loses 67% in 24 Hours

The Terra blockchain ecosystem has been ravaged by the events that took place over the last few days, when the network’s algorithmic stablecoin terrausd (UST) started to lose its U.S. dollar peg. Project founder Do Kwon and the Luna Foundation Guard (LFG) also explained that the team was lending $1.5 billion in bitcoin (BTC) and terrausd (UST) to help defend the peg. The effort was a fruitless endeavor and UST slipped to $0.66 per coin but then, for most of the day on Tuesday, UST managed to climb back above the $0.90 region.

On Tuesday evening, UST started to plummet again and it has continued to slide to its most recent lows at $0.299 per unit. The native token LUNA suffered even more than UST, as it has lost 97% in value during the past 24 hours. LUNA has had a 24-hour price range between $33.93 per unit and $0.810 per coin. Furthermore, after Do Kwon said to stay strong and a plan was on the way, the Terra co-founder addressed the public on Twitter.

“Before anything else, the only path forward will be to absorb the stablecoin supply that wants to exit before UST can start to repeg,” Kwon said. “There is no way around it. We propose several remedial measures to aid the peg mechanism to absorb supply. First, we endorse the community proposal 1164 to Increase basepool from 50M to 100M SDR *) Decrease PoolRecoveryBlock from 36 to 18 This will increase minting capacity from $293M to ~$1200M,” the Terra co-founder added.

Kwon also said that Terra could rebound from the collapse and noted that the project was not going anywhere. “Terra’s return to form will be a sight to behold,” Kwon tweeted. The Terra founder added:

We’re here to stay. And we’re gonna keep making noise.

‘Worse Than Bitconnect’

Of course, under the circumstances of many individuals losing money and some of them losing everything, many people criticized the response from the Terra founder. The podcast host Peter McCormack asked Kwon “What % chance to you give it that the same won’t happen again?” Bitcoin supporter Hasu said the UST event was “worse than Bitconnect.” “At least Bitconnect didn’t masquerade as a stablecoin,” Hasu added. “When your ponzi targets people’s savings (not investment) portfolio, there is a special place in hell reserved for you.”

In addition to the criticism, people have been trying to buy the dip because they believe a strong comeback will happen. However, while doing so, many crypto traders are getting wrecked by the price volatility. Additionally, crypto Twitter (CT) influencers are deleting tweets that discuss UST and LUNA in a positive light. Furthermore, the crypto liquidity provided Genesis explained that the company has “no direct exposure to UST and LUNA.” Individuals are also claiming that the downfall of LUNA and UST was a “coordinated attack.” “Market manipulation at its finest,” one individual tweeted.

Other Terra supporters have been watching bots on Twitter and have stated they are certain Terra’s issues were the result of a blatant attack. There have been odd sightings of bots or Twitter accounts repeating the same statement, which can be found here, here, here, here, and here. While LUNA and UST have not yet plummeted to zero, people are either betting that they will or they believe Do Kwon and think a massive reversal is in the cards. By 10:45 a.m. (ET), UST was trading for $0.504 per unit.

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CEO of Sator Says Luna Foundation and Do Kwon May Still Hold Bitcoin Reserves

Isla Perfito, the CEO of Sator, a community-first Web3 content engagement platform, said that there may be a chance the Luna Foundation Guard (LFG) still holds bitcoin. “People assume LFG already sold their BTC,” Perfito told Bitcoin.com News in a statement. “That’s why UST is pricing at .40 on the dollar. In the event that they have the BTC, their backing is better. Do Kwon should provide a balance snapshot of his BTC to save UST. The CPI numbers came in higher than expected today.” The CEO of Sator added:

In my opinion, inflation has peaked. Investors are now waiting for the stock market to bottom. With UST, 1 LUNA could be exchanged for 1 UST and vice versa. This is why we observed the Luna crash — when they decided to not keep the peg, they were selling Luna coins. With that said, there’s a chance that they have reserves to save UST.

Alex Tapscott, the managing director of the digital asset group at Ninepoint Partners, explained to Bitcoin.com News on Wednesday that Terra’s issue is similar to a hedge fund exploding. “This is not unlike what happens when a large hedge fund ‘blows up’ and is forced to unwind its positions,” Tapscott explained in an email. “It becomes a price taker causing the assets its own to suffer (though often just temporarily).” Tapscott continued:

Long term the thesis on Bitcoin and crypto remains intact. Bitcoin is the first digitally native money for the internet and crypto assets as a whole represent a 2nd era of the internet – an internet of value- that will continue to transform and rethink many industries.

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$1 Parity, Alex Tapscott, Anchor, Binance, Bitcoin Wallet, CEO of Sator, Crash, do kwon, Dollar Peg, Hasu, Isla Perfito, lfg, LFG wallets, LUNA, LUNA down, luna foundation guard, Ninepoint Partners, Stablecoin, Stablecoin UST, Terra, terra (LUNA), USDC, USDT, UST

What do you think about the LUNA and UST fiasco and how things have been unfolding? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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As LUNA’s Price Drops Over 33% In 24 Hours, Stablecoin UST Slips Below $1 Parity To $0.93

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As LUNA’s Price Drops Over 33% In 24 Hours, Stablecoin UST Slips Below $1 Parity To $0.93

As bitcoin dropped to fresh new lows on Monday, the price of terra (LUNA) slid by 33.3% during the last 24 hours. Moreover, the project’s stablecoin terrausd (UST) has lost stability, dropping to $0.932008 per token. Additionally, the Luna Foundation Guard’s bitcoin wallet and ethereum Gnosis safe address has been emptied.

LUNA Price Puts Intense Pressure on Terra’s Stablecoin UST

During the past 24 hours, more than $830 million has been liquidated from the crypto economy, and the price of bitcoin (BTC) sunk to lows not seen since January 2022. Over the past seven days, BTC has shed 20.2% in value against the USD, and 11% of the value was shaved during the past 24 hours. Furthermore, numerous crypto assets have seen deeper losses as terra (LUNA) dropped by 33.3%.

The stress has caused the project’s UST peg or $1 parity to slip beneath the dollar value. At its lowest point on Monday, terrausd (UST) dipped to $0.932008 per unit according to Coingecko.com statistics. UST’s 24-hour price range on Monday has been between $0.932008 to $0.999601 per unit.

Luna Foundation Empties Bitcoin and Ethereum Wallets

In addition to the losses, UST and LUNA took on Monday, after revealing the Luna Foundation Guard (LFG) would lend $1.5 billion in BTC and UST, both LFG’s public bitcoin and ethereum wallets have been drained. The LFG bitcoin wallet once held 42,530.82 BTC but sent the entire stash in a single transaction to another wallet. Additionally, LFG’s Gnosis safe address, which once held millions of dollars in USDC and USDT, has also been drained.

Deploying more capital – steady lads

— Do Kwon 🌕 (@stablekwon) May 9, 2022

On May 3, the LFG Gnosis safe address held $143 million and today, it currently holds $195. At 2:36 p.m. (ET), Terra co-founder Do Kwon tweeted “Deploying more capital – steady lads.” UST’s price has seen some improvement on Monday after the deployment of capital, but has been down between 4.5 to 6.5% during the last few hours.

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While other stablecoin assets like USDC and USDT have felt pressure today seeing much smaller percentage losses, the two largest stablecoins by market cap have held their pegs. Tether slipped down to $0.995691 per unit on Monday while usd coin (USDC) dipped to $0.994630 per unit.

Binance usd (BUSD) is exchanging hands for $0.996616 and DAI has been trading for $0.995420. Most USD pegged stablecoins besides UST remained trading for at least $0.975328 to $0.99 per token. Meanwhile, toward the end of writing this article at 4:00 p.m. (ET), UST has been trying to regain the $1 parity but has yet to accomplish the goal. At press time at 4:30 p.m., the stablecoin UST has managed to jump to $0.956017 per unit.

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$1 Parity, 33% drop, Bitcoin Wallet, Deploying Capital, do kwon, Dollar Peg, lfg, LFG wallets, LUNA, LUNA down, luna foundation guard, Stablecoin, Stablecoin UST, terra (LUNA), USDC, USDT, UST

What do you think about the stablecoin UST dropping from its $1 parity on Monday? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Luna Foundation To Lend $1.5 Billion In Bitcoin And UST To Market Makers — Plan Aims To Protect Stablecoin’s $1 Parity

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Luna Foundation To Lend $1.5 Billion In Bitcoin And UST To Market Makers — Plan Aims To Protect Stablecoin’s $1 Parity

As crypto markets continue to slide in value, concerns about the algorithmic stablecoin terrausd (UST) losing its $1 parity have swelled in recent times. Two days ago on May 7, 2022, UST dipped down to $0.985 per unit against tether (USDT), and the stablecoin’s price drop invoked a great deal of speculation concerning UST losing its dollar peg. Following the drop on Saturday, the Luna Foundation Guard (LFG) revealed it was lending out millions of dollars worth of bitcoin and UST in order to protect the peg until market conditions normalize.

Crypto Market Carnage Strains Algorithmic Stablecoin UST’s Peg, Terra Supporters Claim Stablecoin Was Victimized by a ‘Coordinated Attack’

Digital currency markets have suffered a great deal in recent times as billions of dollars have left the crypto economy during the last few weeks. Of course, crypto market mayhem typically pushes traders toward leveraging stablecoins in order to hedge their wealth from volatile market conditions. During the last few days, BTC has dropped from $40,000 per unit on May 4, to a low of $32,637 per coin on May 9. The entire crypto economy has followed BTC’s freefall and the entire lot of 13,432 tokens in existence is down 5.5% against the U.S. dollar.

This has fueled trade volumes for tether (USDT), usd coin (USDC), and many other stablecoins including UST. However, UST had dropped in value on May 7, slipping to $0.985 per unit against tether (USDT). While this is not the biggest deal and many other stablecoins have slipped below the $1 parity, the topic of Terra’s stablecoin has been trending on social media and forums over the past two days. Furthermore, a significant amount of UST was withdrawn from Anchor Protocol and Curve Finance.

A few Terra supporters called the incident a “coordinated attack” and said the UST dumps were “deliberate.” On Sunday morning, one Terra supporter wrote: “We are again seeing a coordinated attack on UST. $285m UST dump on Curve and Binance by a single player followed by massive shorts on LUNA and hundreds of Twitter posts. So far, not a really successful attempt as the peg is almost back at 1 dollar.” At the time of writing, UST is the tenth-largest crypto asset in terms of market valuation and is changing hands for $0.995077 per unit.

Luna Foundation Guard Reveals Lending of $1.5 Billion in Crypto Assets to Defend UST’s Peg

After all the speculation, rumors, and conspiracy theories, on May 9, 2022, the Luna Foundation Guard (LFG) and Terra’s co-founder Do Kwon explained the team was taking steps to ensure the peg remains defended. “Over the past several days, market volatility across crypto assets has been significant,” LFG said on Monday. “The market turmoil is also reflected by the past week’s uncertain macro conditions across legacy asset classes.” LFG says that it is mandated to “proactively defend the stability of the UST peg [and] the broader Terra economy.”

LFG has decided to lend out bitcoin (BTC) and the stablecoin UST in order to protect the stability of UST’s $1 parity. “The LFG Council has voted to execute the following: – Loan $750M worth of BTC to [over-the-counter] trading firms to help protect the UST peg. – Loan 750M UST to accumulate BTC as market conditions normalize,” the organization said on Monday. Terra’s co-founder, Do Kwon, further updated the public about the lending action. Kwon stressed that “LGF is not trying to exit its bitcoin position.” Kwon added that the main goal is to have capital in the hands of professional market makers.

The liquidity provided has two purposes; “Buy UST if price [is less than] peg” and “Buy BTC if price [is greater than or equal to] peg,” Kwon said, “thus significantly strengthening the liquidity around UST peg.” The Terra co-founder added:

While buys and sells of UST are not meaningfully directional now, we felt it was valuable to have capital ready to be deployed in the current market. As markets recover, we plan to have the loan redeemed to us in BTC, increasing the size of our total reserves.

Essentially, LFG’s professional market makers will leverage the capital to protect both sides of the market to defend UST’s $1 parity. The recent discussions revolving around UST’s peg follow LFG buying up massive amounts of bitcoin (BTC) to keep in its decentralized forex reserve. LFG also acquired $100 million in AVAX for the same purpose. While LFG’s BTC wallet holds 42,530.82 bitcoin, it has not sent any funds. However, LFG recently acquired 37,863 bitcoin from two over-the-counter deals. With no withdrawals stemming from the publicly known BTC address, LFG has likely leveraged the most recent purchase to lend to the market makers.

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$1 Parity, $100 million AVAX, $3 billion in bitcoin, Avalanche (AVAX), Bitcoin, Bitcoin (BTC), crypto assets, do kwon, lfg, LFG Bitcoin, LFG Bitcoin Wallet, Luna Foundation, luna foundation guard, OTC deals, Over-the-counter, Peg, Stablecoin, Terra, Terra Blockchain, Terraform Labs founder, UST, UST Stablecoin

What do you think about Terra’s co-founder and LFG deciding to lend BTC and UST to market makers so they can defend the stablecoin’s $1 parity? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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