Why Terra Luna and UST Coin Are Soaring Today The Motley Fool

Bertrand Perez, CEO of the Web3 Foundation and a former director of the Facebook-backed Diem stablecoin project, expects regulators to demand that such cryptocurrencies are backed by real assets. The broader crypto market, which was already reeling from a dramatic crash that wiped out $2 trillion in value, took another hit as the market value of issued tokens fell below $900 million. For once, the name says it all – stablecoins are a type of crypto currency that are more stable Forex than other cryptocurrencies, which are notorious for their volatility. In the same way that fiat currencies like the dollar used to be backed by gold, the idea behind stablecoins is that they are pegged to types of assets, such as other currencies or valuable metals. At the moment, most stable coins are pegged to a fiat currency, most commonly the US dollar, which means that they are not subject to the steep rising and falling of other cryptocurrencies such as Bitcoin.

The large-scale erosion of value on the Terra network left it vulnerable to a 67 percent attack; a majority of attackers could theoretically collude to steal the remaining assets from the network while its liquidity and staking reserves were low. Over $2 billion worth of UST was unstaked , and hundreds of millions of that was immediately sold.

The UST stablecoin isn’t part of it.

But some blockchain experts say that last week, wealthy investors pulled off a maneuver in which they borrowed huge amounts of Bitcoin to buy UST, with the intention of making huge profits when the value of UST fell, otherwise known as short-selling. In the face of Terra’s UST de-pegging nightmare this week, US Treasury Secretary Janet Yellen takes the chance to label stablecoins a “significant risk” that will have to be dealt with. UST lost its dollar peg and that also led to a sell-off Forex news for its sister token luna, which crashed to $0. That includes lending $750 million worth of bitcoin to trading firms to “protect the UST peg.” and a further 750 million in UST being lent out to buy more bitcoin “as market conditions normalize.” Instead, UST — or “terraUSD” — is created by destroying a sister token, known as luna, using smart contracts, lines of code written into the blockchain. Was the crown jewel, a lending protocol that paid 20% interest on UST deposits.

The number of UST deposits went from roughly 14 billion on May 6 to 1 billion on May 19, a 93% drop in less than two weeks. Terra’s LUNA/UST death spiral was entirely predictable — and it served as a stress test for better-designed stablecoins, writes Gytis Trilikauskis of MEV Capital. https://www.forex.com/ Nansen undertook an investigation leveraging on-chain data from the Terra ecosystem to the Ethereum blockchain in an effort to chart the chain of events that led to the UST depeg. Oluwapelumi is a believer in the transformative power Bitcoin and the blockchain industry holds.

Timeline

The report outlines how these actors withdrew UST funds from the Anchor protocol on Terra. These funds were then bridged from Terra to Ethereum making use of the Wormhole infrastructure. UST’s peg continued to break, with its price falling to $0.60 on Binance the next day. UST also began trading slightly below its peg on Binance (at $0.985). This shook the confidence of the pool’s liquidity providers, who began to withdraw some of their assets. Younessi is unsure whether the depeg was caused by a coordinated attack or not, but said that the responsibility is on crypto developers to create more secure systems.

• Coinbase has been reining in costs to cope with the economic crisis, including a major round of layoffs.
• The new report makes clear exactly what work tech companies still need to do if they want to get on track.
• Investors are increasingly demanding a greater return from Salesforce, which has always funneled its profits toward growth, including spending billions to acquire companies like Slack and Tableau.
• It’s quite possible there’ll be enough of them that they’ll take control in one or both chambers in Congress.

The transparent nature of the blockchain and algorithmic stablecoins, too, equips anyone curious enough with all the tools to see and understand the circulating supply model, the mint/burn Invest in Terra coin cycle and collateralization mechanisms. Even with Terra, there were plenty of whistleblowers publicly campaigning for the imminent doom that approaches, but human psychology triumphed all.