TerraUSD (UST) has called by over 49 percent in the last 7 days, of which over 44% fall has been recorded in the last 24 hours. UST ranking has also dropped to 15, below memecoin Shiba Inu.
TerraUSD has failed to keep up with US$1, which puts its stablecoin Pride at risk.
This all started when Terra’s algorithmic-based Stablecoins TerraUSD started falling.
Crypto exchange Binance even temporarily stopped the withdrawal of UST and LUNA leading to a cascading effect on the prices of both cryptos.
The system seems elegant on paper and a clever bit of financial engineering, but it is unproven.
There have been multiple unsuccessful attempts in the past to create an algorithmic stablecoin.
For instance, about a year ago a token backing up the stablecoin IRON, called TITAN, dropped to zero amidst market uncertainty in what the team called “the world’s first large-scale crypto bank run.”
TerraUSD is a decentralized algorithmic stablecoin (or was). This means that rather than being backed by an asset,
UST uses complex codes to create new coins or destroy old ones to maintain a steady price at US$1. All stablecoins have a governance token, which provides the stability.
Terra is an open-source blockchain payment platform for an algorithmic stablecoin, which are cryptocurrencies that automatically track the price of currencies or other assets.
The Terra blockchain enables users to instantly spend, save, trade, or exchange Terra stablecoins.