It is really sad that $LUNA got dumped so hard. TerraLuna got direct relation with TerraUSD (UST).
Why did $UST, which is supposed to be a stable coin, also crash? $UST is unique when compared to others. $USDT, $DAO, and the like are backed up by fiat. So the value follows the $USD. The $UST has a different way of keeping the value of the UST at 1 USD.
TerraUSD is a decentralized stablecoin running on $ETH that attempts to maintain a value of US$1 Unlike centralized stablecoins, $UST isn't backed by USD in a bank account. Instead, in order to mint 1 TerraUSD, US$1.00 worth of TerraUSD's reserve asset ( $LUNA ) must be burned.
The conclussion is UST is not stable coin. $UST is a so-called algorithmic stablecoin. It works with $LUNA to maintain a price of $1 using a set of on-chain mint and burn mechanics.
I personally really love the value of the concept of TerraUSD. However, it is crazy at the same time to backup stable coin with something not really stable.
Finally, TerraUSD (UST) as well as TerraLuna (LUNA) lost the trust.
In the charts I put the price of Luna on the left, and the Capitalization of Luna on the right. I set the line of the lowest beginning capitalization. It was 291M, and sadly, now the capitalization hit 50M.
TerraLuna has totally lost the trust. Eventhough there will be people buy it again, I don't think that the price will recover in short.
Why did $UST, which is supposed to be a stable coin, also crash? $UST is unique when compared to others. $USDT, $DAO, and the like are backed up by fiat. So the value follows the $USD. The $UST has a different way of keeping the value of the UST at 1 USD.
TerraUSD is a decentralized stablecoin running on $ETH that attempts to maintain a value of US$1 Unlike centralized stablecoins, $UST isn't backed by USD in a bank account. Instead, in order to mint 1 TerraUSD, US$1.00 worth of TerraUSD's reserve asset ( $LUNA ) must be burned.
The conclussion is UST is not stable coin. $UST is a so-called algorithmic stablecoin. It works with $LUNA to maintain a price of $1 using a set of on-chain mint and burn mechanics.
I personally really love the value of the concept of TerraUSD. However, it is crazy at the same time to backup stable coin with something not really stable.
Finally, TerraUSD (UST) as well as TerraLuna (LUNA) lost the trust.
In the charts I put the price of Luna on the left, and the Capitalization of Luna on the right. I set the line of the lowest beginning capitalization. It was 291M, and sadly, now the capitalization hit 50M.
TerraLuna has totally lost the trust. Eventhough there will be people buy it again, I don't think that the price will recover in short.