Coinscreed
  • News
    • Bitcoin News
    • Ethereum News
    • Ripple News
    • Litecoin News
    • Altcoin News
    • DeFi
    • Blockchain News
  • Market Analysis
  • NFT
  • Metaverse
  • Cryptocurrencies
  • Learn
    • Bitcoin 101
    • Ethereum 101
    • Binance Smart Chain
    • DeFi 101
    • Ripple 101
    • ICO 101
    • Trading 101
    • Dogecoin 101
    • Lightening Network
    • NFT 101
  • Crypto How Tos
Advertise
No Result
View All Result
  • bitcoinBitcoin(BTC)
    $31,211.003.52% 24H
    BITCOIN
    24H : 3.52%
    Volume : $22,794,218,660.00
    Marketcap : $593,740,292,081.00
  • ethereumEthereum(ETH)
    $2,144.574.09% 24H
    ETHEREUM
    24H : 4.09%
    Volume : $14,333,758,964.00
    Marketcap : $257,938,949,518.00
  • binancecoinBNB(BNB)
    $311.905.51% 24H
    BNB
    24H : 5.51%
    Volume : $1,734,357,644.00
    Marketcap : $52,353,084,401.00
  • rippleXRP(XRP)
    $0.4473.96% 24H
    XRP
    24H : 3.96%
    Volume : $2,103,375,421.00
    Marketcap : $21,542,672,797.00
  • cardanoCardano(ADA)
    $0.59610.52% 24H
    CARDANO
    24H : 10.52%
    Volume : $936,672,853.00
    Marketcap : $20,109,094,674.00
  • terra-lunaTerra(LUNA)
    $0.00022-52.27% 24H
    TERRA
    24H : -52.27%
    Volume : $2,820,100,140.00
    Marketcap : $1,425,879,290.00
Coinscreed
No Result
View All Result
homerun token
Home Breaking

LUNA, UST Stablecoin Price Crash, Here’s what happened

Ifeanyi Jesse by Ifeanyi Jesse
3 days ago
in Breaking, News
Reading Time: 4 mins read
A A
Share on FacebookShare on Twitter

Following the recent update on the downfall of the LUNA price here are the reasons LUNA and UST Stablecoin fell to nearly zero

LUNA, UST Stablecoin Price Crash Explained
LUNA, UST Stablecoin Price Crash Explained
  • What Is Behind LUNA, UST Fall In Price?
    • 1. LUNA Was Paired With UST
    • 2. The Mint-and-Burn Mechanism
    • 3. Terra Builder Alliance Stopped Using UST As An Algorithmic Stablecoin
  • Binance Halts Trading for Terra, Delists LUNA, UST

According to data from CoinMarketCap, the price of Terra’s native governance and staking token, dropped 99.97% yesterday and is now trading at $0.00005395.

SuggestedArticles

Nigeria Announces New Crypto Asset Rules

Nigeria Market Regulator Announces New Crypto Asset Rules

1 day ago
Tron's New Addition Takes Stablecoin Supply Beyond $1 Billion

Tron’s New Addition Takes Stablecoin Supply Beyond $1 Billion

1 day ago

What Is Behind LUNA, UST Fall In Price?

1. LUNA Was Paired With UST

The reason for LUNA’s free fall is that it was paired with UST.

Reason For LUNA, UST Stablecoin Crash
Reason For LUNA, UST Stablecoin Crash. Source: Tradeview

UST is a stablecoin based on an algorithm. Unlike stablecoins like USDC and USDT, which are backed by real-world assets, algorithmic stablecoins are not. Instead, this type of stablecoin is run by smart contracts that run themselves.

With this arbitrage between the stablecoin and LUNA, there was pressure to sell LUNA, which made the token crash happen faster.

2. The Mint-and-Burn Mechanism

The Terra token is designed to help stabilize UST at its dollar peg with a “mint-and-burn” mechanism. Users could swap $1 worth of LUNA for UST, and vice versa. Each time Terra’s token is swapped for the algorithm stablecoin, that LUNA is also burned.

This week, though, this mechanism was put under a lot of pressure, and UST’s dollar peg began to slip quickly.

As investors tried to get out of the algorithm stablecoin and into Terra, a lot of LUNA tokens were made.

CoinMarketCap says that the UST, which used to be tied to the dollar, is now trading at $0.17.

3. Terra Builder Alliance Stopped Using UST As An Algorithmic Stablecoin

Also, the Terra Builder Alliance, a group trying to save the Terra ecosystem as it falls apart, made a plan today to stop using it as an algorithmic stablecoin for good.

According to the proposal, once all the algorithm stablecoin have been traded for Terra tokens, the stablecoin will no longer exist in its current form.

The goal of the proposal is to make a “collateralized stablecoin,” but it’s not clear how that would work.

Binance Halts Trading for Terra, Delists LUNA, UST

Binance, the largest cryptocurrency exchange in the world, said today that it has taken both Terra and the stablecoin off its list.

At 12:40 a.m. UTC today, the Terra tokens were taken off both the margin and spot markets.

On Thursday, Binance told users that the Terra and Tether (USDT) trading pairs would be taken off the exchange if the price of Terra fell below $0.005.

Updates:
🔸Notice of removal of some margin and spot trading pairs at 12:40am UTC, May 13, 2022.
🔸Adjusting of tick size for spot trading pair at 12:40am UTC, May 13, 2022. https://t.co/jijqNqaTdJ

— Binance (@binance) May 13, 2022
— Binance (@binance) May 13, 2022

Earlier this week, Binance also temporarily stopped withdrawals of the stablecoin and Terra because of the high number of withdrawals that were still pending.

BTC365

Coinscreed

Copyright © 2022 Coinscreed

Navigate Site

  • About
  • Advertise
  • Privacy & Policy
  • Crypto Price Charts

Follow Us

No Result
View All Result
  • News
    • Bitcoin News
    • Ethereum News
    • Ripple News
    • Litecoin News
    • Altcoin News
    • DeFi
    • Blockchain News
  • Market Analysis
  • NFT
  • Metaverse
  • Cryptocurrencies
  • Learn
    • Bitcoin 101
    • Ethereum 101
    • Binance Smart Chain
    • DeFi 101
    • Ripple 101
    • ICO 101
    • Trading 101
    • Dogecoin 101
    • Lightening Network
    • NFT 101
  • Crypto How Tos

Copyright © 2022 Coinscreed

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.