Venus1100
Active member
According to MEXC Exchange data, LUNA, Terra protocol's native staking and governance token, is trading below $1 on Thursday (May 12), a significant drop from the all-time high of $119.18 set just over five weeks ago.
What exactly is Terra?
Terra is a blockchain protocol that powers price-stable global payment systems with fiat-pegged stablecoins. Terra, according to its white paper, combines the price stability and widespread adoption of fiat currencies with the censorship-resistance of Bitcoin (BTC) and provides quick and affordable settlements.
Terra's development began in January 2018, and its mainnet went live in April 2019. As of September 2021, it offers stablecoins pegged to the US dollar, South Korean won, Mongolian tugrik, and the International Monetary Fund's Special Drawing Rights basket of currencies — with plans to expand.
The Terra native token, LUNA, is used to keep the price of the protocol's stablecoins stable. LUNA holders can also submit and vote on governance proposals, giving it more power.
LUNA's contribution to UST
UST is a stablecoin that is "algorithmic." The LUNA token and UST are mutually dependent, as the Terra ecosystem's success is dependent on the adoption of UST as a stablecoin. LUNA invests in UST and is burned when demand for UST increases. Following upgrades such as Columbus-5, LUNA supply may become highly deflationary in the long run.
On the other hand, if UST is perceived as unstable, the value of LUNA may fall. Following the Wormhole hack, UST briefly lost its peg, causing a temporary price crash for LUNA.
Why did UST lose its peg to the US dollar?
On Monday (May 9), Aztec Network's Jonathan Wu posted an excellent thread on $UST's de-pegging from the dollar:
On Tuesday (May 10), popular pseudonymous crypto analyst "Onchain Wizard" posted a fantastic thread outlining his theory on how $UST was attacked:
What exactly is Terra?
Terra is a blockchain protocol that powers price-stable global payment systems with fiat-pegged stablecoins. Terra, according to its white paper, combines the price stability and widespread adoption of fiat currencies with the censorship-resistance of Bitcoin (BTC) and provides quick and affordable settlements.
Terra's development began in January 2018, and its mainnet went live in April 2019. As of September 2021, it offers stablecoins pegged to the US dollar, South Korean won, Mongolian tugrik, and the International Monetary Fund's Special Drawing Rights basket of currencies — with plans to expand.
The Terra native token, LUNA, is used to keep the price of the protocol's stablecoins stable. LUNA holders can also submit and vote on governance proposals, giving it more power.
LUNA's contribution to UST
UST is a stablecoin that is "algorithmic." The LUNA token and UST are mutually dependent, as the Terra ecosystem's success is dependent on the adoption of UST as a stablecoin. LUNA invests in UST and is burned when demand for UST increases. Following upgrades such as Columbus-5, LUNA supply may become highly deflationary in the long run.
On the other hand, if UST is perceived as unstable, the value of LUNA may fall. Following the Wormhole hack, UST briefly lost its peg, causing a temporary price crash for LUNA.
Why did UST lose its peg to the US dollar?
On Monday (May 9), Aztec Network's Jonathan Wu posted an excellent thread on $UST's de-pegging from the dollar:
On Tuesday (May 10), popular pseudonymous crypto analyst "Onchain Wizard" posted a fantastic thread outlining his theory on how $UST was attacked: