Terra Luna the horror continues – For several days, protocol Terra Luna Stuck in a downward spiral. So A stablecoin for the terrestrial reservoirs of the ecosystem It lost its dollar benchmark, causing the LUNA token to plummet. Unfortunately, underground treasuries are struggling to recover their $1 value, causing the protocol and its investors to falter every day.
Terra Luna in turmoil: the infernal snail from the underground reservoirs
The TerraUSD (UST) is the . ecosystem’s stablecoin Terra Luna. Unlike centralized stablecoins like USDT, this coin is not based on a hoard of hard dollars, but on a basket of underlying crypto assets.
So, this one Exposed to the volatility of differences in these underlying assets. In the face of the last year’s decline in the cryptocurrency market, treasuries are gradually moving away from their dollar benchmark, i.e. 1 UST = $1.
During May 9th, the ground tanks moved slightly away from their stallions, It drops to $0.94. So far nothing alarming, this situation is well known for algorithmic stablecoins.
However, the situation did not improve on May 10. In fact, UST made as low as $0.74 before rising again to around $0.9. A breath of fresh air for Anchor users, which unfortunately was short-lived.
Since the beginning of the day, the price of floor tanks has dropped to Bottomed at $0.22 on Binance. The value has again risen slightly, with the floor tanks trading at around $0.33 at the time of writing.
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Drag the LUNA into the underground tanks
As if the situation wasn’t dire enough, Towing the ground tank code LUNA Specific to the Terra Luna blockchain.
Thus, the token that was hovering around the $60 weekend scored a 92% drop It is currently trading at $4.73.
As a reminder, the LUNA token reached ATH at $119 just over a month ago, on April 5th. This represents a decrease of 96% in just one month.
This fall can be explained by several factors. Initially, many users may have sold their LUNA tokens, after witnessing the failure of the ground lockers. Second, the downward pressure could be due to the current switching mechanism between the floor tanks and Luna. Thus, it is possible to burn a dollar of a LUNA device to create a dollar of ground tanks. Conversely, it is also possible to return (recover$1 off floor cabinets to get $1 off luna.
This process was actively used in arbitrage, which made the situation worse for the LUNA token.
The desperate attempts of the Luna Foundation guards
The Luna Foundation Guard (LFG)is a non-profit organization whose mission is to support the evolution of the Terra Luna ecosystem.
Facing the descent into hell, the latter did not stand idly by. And so, this one Liquidation (at a loss) over 42,000 newly purchased bitcoins To try to stop the bleeding on the night of May 9-10. But that wasn’t enough, despite billions of dollars being pumped into the system.
Obviously, LFG hasn’t said its last word. And so, according to information revealed yesterday by our colleagues from TheBlock, the guard of the Luna Foundation It is currently looking to raise nearly an additional $1 billion to stop the fall of underground reservoirs.
Also, according to the same source, in exchange for $1 billion, LFG will allow investors to purchase LUNA tokens at a discounted price, 50% less than the market price. However, these tokens will have a two-year ban period, ensuring that they are not resold outright, again causing the price to drop.
But is this show really fun? In fact, LFG is offering investors to buy back LUNA tokens at a 50% discount, while the asset has lost more than 90% of its value in just a few days.
In addition, the words of some brokers in Terra Luna Discord do not inspire confidence. And so we can read there:
“There is no death spiral because to get floor tanks back to the dollar level, you have to create luna (which reduces the value of luna by increasing supply) — a trillion luna can be created if needed, or 10 trillion, or 1,000 trillion, whatever. The price of luna will be Close to zero, but the terrestrial reservoirs will reach parity no matter what.”
“If you hold a LUNA (maybe a bet), you lose pretty much everything. If you hold the floor cabinets, you get dollars when parity returns.”
On the other hand, LFG is trying to negotiate $1 billion for an “opportunity” to buy LUNAs at a discount. On the other hand, black and white Discord maintainers explain that LUNAs will be printed to restore the standard if necessary. Even if it means sending the price of LUNA to zero.
Of course, it should be noted that the confirmations of the Discord broker are by no means official decisions. However, the situation remains puzzling.
Meanwhile, the entire ecosystem is holding its breath. Last night, Do Kwon, co-founder of Luna, announced that the plan to restore the underground reservoirs is about to be announced. This could be the Terra Luna ecosystem’s last hope… in the event that the loss of the dollar peg isn’t really disastrous, of course.
Panic is not just limited to the cryptocurrency markets. Actually, The stock market also posted a big drop in recent days.
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