The crypto sector has been experiencing a general downturn as almost all cryptocurrencies have dropped in value. LUNA, the native cryptocurrency of the Terra network, has completely collapsed and is now valued at $0. At the same time, the UST has fallen further below its peg. As of Friday, it is trading at a price of about $0.1, according to Coin Market Cap.

UST is meant to work as an algorithmic stablecoin, which means its value should always be at $1. Given the serious drop in value, experts have noted that it may never re-peg. As an algorithmic stablecoin, UST is not backed by any real-world assets. Instead, it is meant to maintain its peg through a system of burning and minting tokens.

It is highly likely that Terra will be the last algorithmic stablecoin that will ever gain mass adoption by the crypto community. Projects like TITAN also met a similar end.

Yesterday, Terra halted the block at a height of 7607789, citing concerns that the blockchain was being attacked.

Terra’s Bitcoin Reserve
UST has been having trouble maintaining its peg over the past few weeks, and this prompted the company to purchase Bitcoin reserves worth $1.5 billion. Do Kwon, the CEO of Terraform Labs, said that he wanted to acquire Bitcoin reserves worth $10 billion. This was meant to maintain the peg of the UST.

The company would lend out large sums of money over the past few days to try and get the UST to $1, but this would ultimately fail. With the crash of LUNA, UST would fall to a price of less than 50 US cents. It now seems to be collapsing entirely.

Still, Terraform Labs remains one of the top holders of Bitcoin in the world.

Rating: 6.83/10
Supply: 370,719,008 / 843,260,032
Release date: July 29, 2019

Description: Keen on trading LUNA? Make sure to always check the current supply before trading Terra (LUNA). Learn more in our review!

Risk warning: Trading, buying or selling crypto currencies is extremely risky and not for everyone. Do not risk money that you could not afford to loose.


Effect on Tether
UST was the third-largest stablecoin in the world, and it also ranked among the top ten cryptocurrencies by marketcap. Its collapse shook the entire crypto community and triggered massive withdrawals from Tether, which is still the largest stablecoin. This would drive the price down slightly to a low of 95 cents. However, it would regain its peg, even after more than $3 billion left the network in a single day.

While Tether and UST are both stablecoins, they work in very different ways. According to Tether, its stablecoin is backed by actual US dollars, and this is how it can always trade at a price of 1:1 with the USD. While there have been concerns about the size of the company’s dollar reserves, it has worked well so far.

It is important to note that a lot of Bitcoin trading is done in Tether, so its collapse would have a significant impact on the entire crypto sector. Crypto investors usually turn to stablecoins like Tether in times of serious market volatility.

Why Does the Collapse of LUNA and UST Matter?
These two cryptocurrencies had very high market caps and attracted a large number of investors. Many people have been left in serious financial distress following the collapse of the cryptocurrencies, and this has led to some reports of self-harm.

The collapse of TerraUSD has also raised doubts about the stability of stablecoins. Some people have noted that the collapse could have resulted from a targeted attack, and it is not clear whether the same thing may be done to other stablecoins.

Another impact of this collapse is that the US government has started looking into regulating stablecoins. Janet Yellen, the Secretary of the US Treasury, noted that there are rapidly growing risks in stablecoins.

Conclusion
Yesterday, LUNA completely collapsed, and this led to a significant drop in the price of UST. The company has to stop the blockchain temporarily as it noted that it was experiencing governance attacks. Both of these cryptocurrencies may never recover as it can be difficult to regain the trust of the crypto community. The collapse of UST has forced the US government to look into the regulation of stablecoins.

You can get more updates on the world of crypto at Crypto Lists.

Terra Newsflash
    Kucoin release Luna 2.0 futures: LUNA/USDTKucoin release Luna 2.0 futures: LUNA/USDT
    Tuesday, 31 May 2022 5:45 pm
    For those into leverage trading, that is now possible with Luna 2.0 and Tether (USDT) through Kucoin (review). You can set the leverage between 1x (so no leverage) up to 20x. You can go both long and short in Luna 2.0 and if setting a take profit and stop-loss, it's simple to handle the position. Kucoin shows the amount of long and short positions, that varies constantly. While writing this - 60% are long in LUNA and 40% are short. Keen on trying? Sign-up for Kucoin today and give...
    Read the full newsflash


    A moon-day for crypto - Luna goes up 95%A moon-day for crypto - Luna goes up 95%
    Tuesday, 31 May 2022 12:04 am
    It's been a really positive day for cryptocurrencies again. Luna 2.0 is up 95% today, while Terra classic up up 17%. Other coins such as the fitness related cryptocurrency called STEPN is up 17%, while Bitcoin is up 7.6%, ETH is up 9%, Waves shows a 67% gain and ApeCoin goes up 16%. What are you trading today? Try with or without leverage at fantastic eToro today, one of the most...
    Read the full newsflash


    New Luna (2.0) is Live: Up 1000%New Luna (2.0) is Live: Up 1000%
    Saturday, 28 May 2022 2:45 pm
    The new version of Luna 2.0 is now live with the same ticker as the old one (LUNA). While the new LUNA is up 1000%, the old Luna Classic (LUNC) is down 48% today. It seems like many old Luna classic owners are selling off their stake, dragging the price down. Meanwhile, people are getting into the new LUNA, even if it's going to be volatile in the coming days. You can tr...
    Read the full newsflash


    Terra (LUNA) testing 0.02 level; Vote likely to passTerra (LUNA) testing 0.02 level; Vote likely to pass
    Thursday, 12 May 2022 3:24 pm
    Everything points towards a resolution in the new proposal for UST, meaning that minting rewards for Terra (LUNA)Terra network - LUNA - is down from 90 USD 2 weeks ago to 0.02 today. For swing traders, it can be an interesting...
    Read the full newsflash


    Will the Terra network collapse?Will the Terra network collapse?
    Wednesday, 11 May 2022 1:00 pm
    The risk of collapse of the Terra network seems to increases for every day that goes, without any significant changes in the algorithmic stablecoin and it's ties to Terra (LUNA). Do Kwon, the South Korean founder of LUNA, said on Twitter yesterday that he is "close to announcing a recovery plan for $UST. Hang tight". Still, 19 hours later, no announcement has been made about upcoming changes and UST is trading at 0.5 to the dollar, recovering from 0.3 for one dollar in the early morning. Crypto Lists find the de-peggning as far away from the wish of a stablecoin that's possible. There are surely ways to adjust the algorithmic pegging, but something has to be done - and that's quick. Terra (LUNA) fallen from top 10 in terms of market cap among the leading cryptocurrencies, to top 50 while writing this. Luna is down 90% today alone, and is trading for $3. Two weeks ago, the price for one Terra (LUNA) was 90 USD. So in general, all...
    Read the full newsflash

Recent crypto sites
Recent crypto coins
CryptoLists.com
Copyright © 2019-2022, by Crypto Lists Ltd (CryptoLists.com). Company name: Crypto Lists Limited. Address: 5 Upper Montagu Street, LONDON W1H 2AG, England.