Stable currency is a digital token linked to the value of traditional assets such as the US dollar. They are popular as safe havens in turbulent times of crypto market. They are a common trading medium and are often used by traders to transfer funds and speculate on other cryptocurrencies.
Terrausd lost its peg to the US dollar on Tuesday, falling to $0.67 at one point, according to the price website coingecko.
Subsequently, Terra's non-profit foundation Luna foundation guard (LFG) began to sell all its bitcoin reserves worth $1.3 billion in an attempt to restore Luna's parity with UST, which added huge selling pressure to bitcoin, which has plummeted. If Luna's market value is lower than UST, the terra project may not have enough funds to support the algorithm to stabilize the value of the currency and maintain its linkage.
Terrausd attracted attention earlier this year when Luna foundation guard promised to collect bitcoin worth $10 billion to support the link between terrausd and the US dollar.
Market participants are on twitter Expressed concern about the events of the past day. Useful users said: "who could have thought that the financial crisis in 2022 was triggered by the internet currency managed by LFG?"
Another user said: "no matter what the result is, I don't want people to call ust decentralized. Even the small amount of guarantee it has is opaque and controlled by a single party. It is used to perform discretionary open market operations. This is 10 times worse than the Fed."