Terra is an open-source blockchain protocol that serves as the foundation for algorithmic stable coins and a network of financial apps. Terra is one of the protocol’s two main cryptocurrency tokens, the other being Luna. Terra stablecoins are used to track the price of fiat currencies such as the US dollar and euro, while Luna is used for blockchain governance.
Tokens Are Sinking, And TerraUSD Has Announced A Recovery Strategy!!
The Terra protocol keeps the Terra stable coin’s price stable by ensuring that supply and demand are constantly balanced. This is accomplished by employing Luna as the Terra stable coin’s variable counterweight. Stablecoins are digital tokens that are pegged to traditional assets like the US dollar, popular during times of market crisis, and are a widespread medium of exchange, frequently utilized by traders to shift funds and speculate on other cryptocurrencies. This week, the cryptocurrency market is experiencing a historic meltdown.
Bitcoin (BTC) was trading at $28,031.48 at the time of writing, much below the benchmark of $30,000. Bitcoin was trading at Rs 23.8 lakh on Indian exchanges. Even Ethereum (ETH), which is presently trading at $1,937.85 on worldwide exchanges and Rs 1.65 lakh on Indian platforms, has had a difficult week. The largest drop among all cryptos looks to be Terra Luna (LUNA), which fell almost 85 percent on May 11. The cause for this is the TerraUSD (UST) stablecoin’s ‘de-pegging.’
UST was recently ‘de-pegged’ from its $1 value to $0.45. This was a 55 percent decrease. Because UST and LUNA are linked, a large reduction in UST’s value has resulted in a drop in LUNA’s overall worth. Terra’s overall market worth fell below $2.75 billion, making it the 34th most valuable cryptocurrency. It was the ninth-largest crypto coin with a market cap of almost $25 billion during its peak.
Do Kwon, the founder of Terraform Labs (TFL) — the company behind UST, the cryptocurrency Terra (LUNA), and the Luna Foundation Guard (LFG) — updated the situation in a series of tweets this morning in the hopes of reversing the situation.
“I recognize the previous 72 hours have been tremendously difficult for all of you,” Kwon stated. “Know that I am determined to work with each of you to weather this crisis, and we will build our way out of this.” “Together.”
According to a report, Kwon is aiming to raise over $1 billion from investment firms and market makers, and ‘rebuilt’ TerraUSD so that it is collateralized, rather than relying on an algorithm to preserve its 1:1 dollar peg, it would be backed by reserves.
The agreement hasn’t been completed; investors will be able to buy LUNA tokens at a 50% discount with a two-year vesting schedule, according to The report.
Since then, LUNA has been heavily discounted, making it unclear whether investors will still consider the offer.
Also, Going forward, Kwon intends to support a Terra community request to double the amount of LUNA that can be minted, allowing holders to “absorb the UST more quickly” or sell because only a limited number of UST may be sold each day.