The prices of Luna (LUNA) and its related stablecoin TerraUSD (UST) are in freefall at the moment, as the entire project appears to be unwinding.
UST is an algorithmic stablecoin that's supposed to be pegged to the US dollar. A combination of burn mechanics involving related token Luna are supposed to keep it to its peg.
Yet over the last few days the mechanism has broken down, with investors rushing to the exit. Even though the Luna Foundation Guard (FLG), a non-profit set up to support the Terra ecosystem, deployed $1.5 billion in assets on Monday to help the stablecoin return to its peg, it has not been enough. The Block reported on Tuesday that LFG is seeking more than $1 billion to support the project.
The price of Luna is now down to $4.51 as of 3:40 a.m. ET on Wednesday, a slide of 85% in the last 24 hours. It has fallen from a high of $116 in April . Part of the reason Luna is being hit so hard is its role in providing stability for UST.
At the same time, UST has completely lost its peg. It's now down to $0.27, meaning stablecoin owners have lost around two thirds of their value. While the stablecoin has rebounded at various points during its fall, it is now at its lowest point yet.
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