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The development comes after the Luna Foundation Guard announced that its massive bitcoin reserves will be used to defend UST's dollar peg.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. The project’s floor price has dropped dramatically following the news. Currently, there is no concrete link between the LFG reserves and Terra's on-chain mint and burn mechanism. UST, a so-called algorithmic stablecoin, works with LUNA to maintain a price of $1 using a set of on-chain mint and burn mechanics. The project’s floor price has dropped dramatically following the news. The project’s floor price has dropped dramatically following the news.

The spring of 2021 was a bad one for the price of Bitcoin, and 2022 is shaping up the same. Early on Monday, the largest cryptocurrency by market value plunged ...

On Saturday, the Luna Foundation Guard (LFG), a reserve associated with Terra, announced it would issue $1.5 billion in loans denominated in Bitcoin and UST after the stablecoin lost its peg to the U.S. dollar. From May to July 2021, Bitcoin saw a similar tumble, around the news of the Delta variant disrupting the economic recovery. Early on Monday, the largest cryptocurrency by market value plunged 50% from its November all-time high of $69,000, and it’s still dropping in the evening.

TerraUSD is without its dollar peg for the second time in three days, falling to $0.9009 on Monday, with price of Luna also dropping 30% in the last 24 ...

Luna has a floating price, and is meant to be a “shock absorber” for the price of UST. On March 22, he said he had $3 billion in funds that would go towards buying assets to back the stablecoin. The report noted that Luna’s price drop makes its market cap is less than UST’s, which could throw off the way it all works, making it so a Terra bank run could make it so some users can’t redeem UST for Luna.

Bitcoin and the wider suffered a severe sell-off on Monday. This article explores the external and internal factors that drove the price drop.

The closely watched stablecoin TerraUSD is getting propped up by its backers after losing its peg to the dollar over the weekend.

Algorithmic stablecoins, like their more “traditional” counterparts, are supposed to provide calm in the chaos of crypto. Instead, as investors in one such ...

Luna Foundation Guard, the association created to support the decentralized token and Terra blockchain, said it will issue loans worth about $1.5 billion in ...

“The weekend UST event looked, felt, and played out like an attempt to manipulate UST lower on the back of the 4pool Curve pool going live,” John Kramer, director of trading at crypto market maker GSR, said. Kwon said on Twitter that Terraform Labs initially removed $150 million TerraUSD from Curve to prepare for a new liquidity pool going live this week and sent back $100 million TerraUSD after the TerraUSD depeg. Curve Finance essentially allows users to provide liquidity to different “pools” with different tokens, while using a mechanism called an automated market maker that helps determine the price of a token when people trade crypto in every pool. To oversimplify this, for every TerraUSD created, about $1 of LUNA is taken out of the circulation and vice versa. Luna Foundation Guard, the association created to support the decentralized token and Terra blockchain, said it will issue loans worth about $1.5 billion in Bitcoin and TerraUSD to help strengthen TerraUSD’s peg after it dropped below a $1 on Saturday as crypto markets continued to plummet. Stablecoins are still mostly used by speculators, often as a place to park their money to avoid wild swings in crypto markets in lieu of regular dollars.

By tapping into its bitcoin reserves, UST's salvation may have exacerbated a bitcoin sell-off that brought BTC to its lowest price since July 2021.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Amid Kwon’s silence, retail boosters of Terra, so-called “LUNAtics,” appeared to be grappling with the possibility of a Terra collapse. That action coincided with a modest recovery in UST’s price; it surged from lows in the $0.65 range to $0.78 as of press time. UST, a so-called algorithmic stablecoin, works with LUNA to maintain a price of $1 using game theory and a set of blockchain-based mint and burn mechanics. In a world where there are few other uses for UST, such a scenario would have spelled trouble for the fledgling currency. “At this point they either let LUNA bleed out max convertible amount per day or recapitalize the UST debt for cents on the dollar. Luna has also recovered from a low of $23.16 to $28.81. The fund raise gives the firm a $1.25 billion valuation. The fund raise gives the firm a $1.25 billion valuation. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. The fund raise gives the firm a $1.25 billion valuation. The price action prompted the custodian of Terra’s bitcoin reserves, the Luna Foundation Guard (LFG), to snap up and quickly deploy 28,205 bitcoin in a bid to defend the peg by buying up UST and providing liquidity on exchanges.

Terra is not in the most stable position at the moment, since its stablecoin and native token are both at the mercy of the bears.

Working as a journalist and editor in the crypto industry for over a year now has made me better understand the responsibilities that entail this profession. This left the LFG reserve balance at just $2.7 billion when it was at $3.9 billion a week ago. The last 24 hours have been terribly uneventful for Terra ecosystem investors as TerraUSD, known to be the biggest decentralized stablecoin, lost its peg. The lending platform noted the total value locked on it declined. With a keen interest in Decentralized Finance and the political impact of this industry, I strive to absorb as much knowledge as I can and share it with others. As I continue to learn and grow, my experience as a market analyst, news writer, and interviewer has enabled me to better understand cryptocurrencies, the world of NFTs and Metaverse, and everything that comes with web3.

LUNA token was down 52% on the day, while UST recovered slightly to $0.90 at the time of writing.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Updates token prices throughout. The news of the fundraise coincides with the launch of Casa API.

Investors in bitcoin are in panic mode as the controversial terraUSD stablecoin slips further from its intended $1 peg.

In a follow-up tweet, the organization said it had withdrawn 37,000 bitcoins — worth over $1 billion at current prices — to lend out. In simple terms, the Terra protocol destroys and creates new units of UST and luna to adjust supply. As of 7:00 a.m. ET, bitcoin was trading at $31,324, down around 5% in the last 24 hours. The theory was that UST could eventually be redeemed for bitcoin instead of luna, but this is untested and hasn't yet been put into practice. TerraUSD, or UST, sank below 70 cents for the first time late Monday, as holders continued to flee the token in what some have described as a "bank run." However, unlike with those cryptocurrencies, Terra doesn't have cash and other assets held in a reserve to back its token.

LUNA and UST cryptocurrencies are in a freefall amidst a crypto market meltdown. What's happening?

That's just a simplified example, but someone has been selling a lot of UST and shorting a lot of LUNA. The LFG's coffers are deep, and there may be other large investors willing to jump in and help maintain the UST's price. A stablecoin that's backed dollar for dollar, with dollars held in actual cash in a bank somewhere, is a lot less likely to lose peg against the dollar. Should LFG be forced to sell all of its Bitcoin, that would probably be bad for Bitcoin's price. It has a "sister" cryptocurrency called LUNA, to which it is inextricably linked, as you must burn (crypto lingo for destroying) LUNA to create UST and vice versa, and you can always (in theory) exchange 1 UST for $1 worth of LUNA. The system is designed to take advantage of supply and demand; should demand for UST drop and its price lose peg to the dollar, arbitrageurs (traders who make money from market inefficiencies) will (in theory) sell LUNA for UST until the balance is restored. Bitcoin's price is itself volatile, and it's not doing well in the current macroeconomic climate, with the Fed switching from quantitative easing to tightening, supply chain wreaking havoc in manufacturing, and the war in Ukraine raging and adding even more jitters to the already shaky markets. The easy way to do this would be to just deploy dollars, but the LFG has been buying massive amounts of Bitcoin, adding it to the treasury that can be used to protect the UST's price. There's another mechanism that protects UST's peg to the dollar. But they do not work well in extreme scenarios, such as market demand for LUNA and/or UST disappearing overnight. The decline was rapid, but that's fairly usual in the world of crypto. In the world of cryptocurrencies, things aren't that bad because entire countries' economies aren't at stake, but they're still bad. OK, but imagine the USD losing purchasing power in a matter of hours or minutes.

(Bloomberg) -- Treasury Secretary Janet Yellen said the de-pegging of TerraUSD shows the urgency to have a regulatory framework on stablecoins, ...

The biggest stablecoins by market value are Tether, USD Coin, Binance USD, and UST. Stablecoins are also used for day-to-day payments by many people around the world. She said it would be “highly appropriate” to aim for passing a legislation this year.

Yellen said UST had "experienced a run" at a Senate Banking Committee hearing Tuesday. Photo: Stefani Reynolds/AFP/Getty Images.

But the stablecoin lost its peg over the weekend, dropping as low as $0.60. It's not clear what caused the stablecoin to lose its peg. The algorithmic stablecoin UST, which is on the Terra network, is designed to keep a one-to-one peg with the U.S. dollar.

Yellen Cites UST Breakdown While Calling for Stablecoin Rules · Treasury Secretary points to risk of financial instability · Fed warned this week that stablecoins ...

A 'stable' coin lost its peg over the weekend and pledged $1.5 billion in Bitcoin trying to stabilize. Here's how the algorithmic stablecoin was supposed to ...

As the UST stablecoin dropped, it brought its sister coin down with it. It (theoretically) maintains its dollar peg through an algorithm that encourages traders to take advantage of any price changes in the stablecoin. But he stops short of calling UST stable. The system relies on traders burning or creating tokens for profit to maintain its peg to the U.S. dollar. But after days of triage by LFG, the UST stablecoin still hasn’t regained its peg. Because there is less UST changing digital hands, the price should theoretically go up toward $1 again, maintaining the peg. This process works through UST’s pairing with its sister cryptocurrency, Luna. Every time a UST token is minted, the equivalent of $1 in Luna is burned, and vice versa. The idea behind stablecoins is that investors use them as a “safe” cryptocurrency asset. Lacking reserves puts UST in particular at the will of various assumptions, Clements said, including those that there will be ongoing interest in the use cases of UST and that there will always be enough traders with accurate price information taking advantage of when UST falls below a dollar to keep the stablecoin in check. On Saturday, the UST stablecoin lost its peg to the U.S. dollar and then again on Monday. As of Tuesday afternoon, the stablecoin was still off its dollar peg by about 10 cents. If the price of UST exceeds $1, traders are incentivized to burn Luna in exchange for a dollar in UST, which increases its supply and theoretically will eventually drop the price back to $1. They are tied to the price of a fiat currency like the U.S. dollar, so in theory, one stablecoin pegged to the dollar is always worth at least $1.

Luna Foundation Guard's billions of dollars in bitcoin without an actual infrastructure ready to deploy left Terra's stablecoin UST vulnerable to a ...