Terra Bets the House on a New Fork as the Zero-bound LUNA Coin Can’t Resurrect the UST Stablecoin

Terra Bets the House on a New Fork as the Zero-bound LUNA Coin Can’t Resurrect the UST Stablecoin

Terra Bets the House on a New Fork as the Zero-bound LUNA Coin Can’t Resurrect the UST Stablecoin Terra (LUNA), a public blockchain protocol that powers a number of non-collateralized stablecoins, will be long remembered for unleashing the crypto sphere's first "Lehman" moment as the whale-sized volatility quakes and the corresponding contagion emanating from TerraUSD (UST) losing its $1 peg spread to virtually every corner of the market, hammering Bitcoin and causing Tether to briefly lose its peg. Before delving into the details of this crisis, let's go over a quick refresher course. Terra maintained UST's $1 peg by algorithmically adjusting the supply of UST and LUNA. If the price of UST fell below $1, the supply of UST was burnt by minting $1 worth of LUNA, entailing a swap …
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