The Terra network’s native algorithmic stablecoin TerraUSD (UST) has plummeted more than 45% over the past 24 hours.
On Wednesday morning it plunged as low as $0.2998, according to data from CoinMarketCap.
It’s currently trading around $0.50 per coin, far below its $1 peg. In terms of market value, the stablecoin has shed more than $11 billion since May 9, 2022.
Today, UST’s market cap is just over $7 billion, making it the fifth-largest stablecoin on the market.
Rather than being backed by traditional assets (i.e. cash, treasuries, etc) or even cryptocurrencies, Terra’s stablecoin had attempted to maintain its peg using a mint-and-burn mechanism in tandem with LUNA, Terra’s native governance and staking token.
In this arrangement, investors could always swap 1 UST for $1 of LUNA.
Though today marks the lowest price point UST has fallen to, the stablecoin has been battling since Sunday to recover its $1 peg. At that time, the stablecoin dropped to $0.985.
The event was nonetheless enough to incite panic in the market, dragging LUNA down 10% at that time.
Today, though, LUNA’s plunge appears to know no floor.
Today, LUNA is trading at around $5.50 after having seen an all-time high of $119 a little more than a month ago.
