As the LUNA price continues its downward trend, things appear to be getting worse for the Terra ecology. LUNA has dropped another 57% in the last 24 hours and is now trading at $16.71(R268). The UST, on the other hand, is still de-pegged and is currently trading at $0.80(R12.81).
The TerraUSD (UST) stablecoin has experienced significant volatility in the last 24 hours, with dramatic swings ranging from $0.60 to $1.0(R9.61 to R 16.01). The total-value-locked (TVL) in DeFi on the Terra blockchain, on the other hand, has plummeted by 52% in the last 24 hours.
UST, as we all know, is an algorithmic stablecoin. As UST continues to trade below $1.0(R16.41), more LUNA is minted into the ecosystem, resulting in an excess supply over demand. As a result, the LUNA price has dropped by more than 80% on weekly charts, with most of the drop occurring in the last four days.
The Luna Foundation Guard has already begun corrective action. It opted to lend $750 million(R12B) in UST as well as $750 million(R12B) in Bitcoin reserves. However, given the nature of the continuous sale of UST, this does not appear to be sufficient at this time. On the other hand, renowned cryptocurrency exchanges such as Binance stopped LUNA and UST withdrawals on Monday.
Terra’s Founder working on a recovery strategy
Despite the fact that the Terra ecosystem appears to be in trouble at this point, founder Do Kwon is holding his breath. Do Kown tweeted a few hours ago that it is working on a recovery strategy for Terra’s UST stablecoin.
Rumours in the crypto industry say that Terra’s parent organization, Luna Foundation Guard, is attempting to gather $1 billion(R16B) from crypto investors in order to preserve the UST stablecoin. According to sources familiar with the matter, LFG is in active talks with some of the industry’s major investment firms and market makers.
All eyes are on Do Kwon to see whether he can pull this off and get Terra out of trouble. The recent UST crash has also caught the interest of US lawmakers.