- UST has depegged for the third time losing 46.17% of $1
- LUNA dropped by 85% in an hour
- UST has dropped 5 places in its market capitalization position
- UST market cap has dropped by 54.3%
LUNA, the Terra blockchain internal token has dropped to just above $5, losing 85% of its value on May 11, 2022. Data available from Coinmarketcap shows that the cryptocurrency is still dropping in value, even as the selling pressure continues to bear down on the digital asset.
LUNA Price Losses
The LUNA/USDT chart shows that LUNA plunged from $86.16 to $5.26 investor confidence dropped.
Terra is the blockchain behind Terra USD (UST), the algorithmic stablecoin that depegged from the dollar on May 7 and again on May 10.
UST Also Looks Bad
UST is currently unpegged from the USD. Having lost 6 cents, the stablecoin has lost its stability and is trading at $0.5006 at the time of reporting. The stablecoin is now listed in the 15th position, dropping 5 places in market capitalization rating. Currently, its market cap stands at $8.1 billion, a drop of 54.3%.
Remedial Attempt By LGF
This is despite the efforts of the Luna Guard Foundation, the Singapore-based foundation which is behind the stablecoin.
Two days ago, the co-founder of the foundation announced that the entity would work on stabilizing the unpegged stablecoin.
Kwon wrote on a Twitter post
“The LFG Council just voted to deploy 1.5B in capital (0.75B in BTC, 0.75B in UST) to allay market concerns around UST.”
They later dumped $1.4 billion in BTC, which represents a bulk of the forex reserve the foundation holds. This was done with the objective of “rebalancing” the floundering stablecoin according to Kwon. Even though it seems not to have had the desired effect on the UST and LUNA prices.
Did Vitalik Predict Stablecoin Could Depeg?
Earlier, the Ethereum co-founder, Vitalik Buterin had raised concerns about stablecoins.
In an interview shared by Bankless, the Ethereum co-founders said that the stability of a stablecoin is dependent on the ability of the managers to employ the services of an efficient market maker. Buterin said that anyone can do this for some time.
“Maybe, RAI, Dai, USDT are the only three stablecoins that we really need. There many other good projects that may be unrecognized. There are also many othr projects that are doing insanely risky businesses. These are under-collateralized, barely collateralized kind of stuff that are trying to market themselves on how optimal they are without caring …”
UST looking ugly. 😬
Did @VitalikButerin predict this?
This is from three weeks ago… pic.twitter.com/iabMvHgQLr
— Bankless 🏴 (@BanklessHQ) May 10, 2022
Buterin said that people believe that a stablecoin is good just because it has low volatility. However, he maintained that stability of a stablecoin is a function of how good the market maker is and not intrinsically linked to its design as a stable cryptocurrency.