LUNA Crashes by 48% as UST’s Stability Gets Shaken, Dips Below $1
- LUNA fell by 48%, crashing to $31.72, according to estimates by CoinGecko.
- The algorithmic stablecoin UST has fallen by 9.9%.
- Both assets’ market cap discrepancy may affect UST’s stabilizing mechanism.
Terra (LUNA) sharply fell by 48% over the last 24 hours, crashing to $31.72 on Tuesday, according to estimates by CoinGecko.
While LUNA and most cryptos bleed red, LUNA’s sister token TerraUSD (UST) has fallen by 9.9%. The algorithmic stablecoin has lost its dollar peg, sitting at 89 cents, according to CoinGecko at the time of writing.
It is important to note that stablecoins are backed by cryptocurrencies, fiat, or commodities like gold or oil. But in the case of UST, it relies on algorithms that manipulate a fiat currency’s price by controlling the supply of cash to maintain a price of $1. This is done through a mint and burn mechanism.
LUNA’s price crash affected its market cap, which is now over $11.2 billion. This number is below UST’s market cap of over $16.2 billion. This can probably shake the foundations of UST’s stabilizing mechanism, with holders unable to withdraw or redeem their $1 of UST for $1 of LUNA.
In terms of market cap rank, LUNA and UST sit at 14th and 10th place, respectively.
LUNA has a circulating supply of 360 million and a total supply of 740 million coins. Meanwhile, its sister token has a circulating supply of 18 billion UST coins and a total supply of 18.2 billion.
This recent price dip now has caused LUNA to fall by 74.8% from its all-time high (ATH) earlier last month.
In other news, Terraform Labs, the Terra blockchain backer, will issue $1.5 billion in loans denominated in both UST and Bitcoin to help the stablecoin following its “de-pegging.”
Read more: https://coinquora.com/luna-crashes-by-48-as-usts-stability-gets-shaken-dips-below-1/
Text source: News – CoinQuora – Latest Cryptocurrency and Block
