Now Who Can Save LUNA?
The discussion about who can now save LUNA is getting heated. Elon Musk, CZ, Warren Buffett, and even bitcoin creator Satoshi Nakamoto have all been mentioned, but the current situation appears to be too severe for any recovery. Investor confidence has burst like a bubble, and the whole cryptocurrency market is in the unloved red color.
The UST depeg and the severe LUNA devaluation in recent days is one of the most remarkable events in the entire history of the crypto industry. LUNA tokens serve as Terra network’s reserve fund, supporting the network’s stablecoin UST. Terra keeps its peg by minting and burning LUNA, to put it another way, the stability of UST is highly dependent on the stability of LUNA.
However, UST has dropped off its peg due to a sharp drop in the price of LUNA. According to CoinCu data, LUNA is currently trading at $0.4, down 96.76% in the last 24 hours, compared to over $120 20 days ago. UST has also dropped to $0.6 after recovering around the $0.9 level. With a market capitalization of about $763M, the Terra’s tokken has dropped out of the top ten list of tokens by market capitalization. This is one of the most impressive large-cap token sell-offs we’ve witnessed this year, and it signals many serious trouble and concerns about the collapse of Terra network and its stablecoins system.
CEO of Terraform Labs Do Kwon has revealed his plan to help the stablecoin UST recover its dollar peg.
He stated in a Twitter thread on Wednesday that the Terra community has had a difficult 72 hours and that he hopes he can help it survive. Because of the way stablecoin mechanics operate, Kwon realized that the amount of capital seeking to leave UST has resulted in a lot of selling of LUNA.
“Before anything else, the only path forward will be to absorb the stablecoin supply that wants to exit before UST can start to repeg. There is no way around it,” he explained.
He’s supporting a proposal from the community to boost the quantity of LUNA minted every day. More UST holders would be able to cash out as a result.
“Naturally, this is at a high cost to UST and LUNA holders, but we will continue to explore various options to bring in more exogenous capital to the ecosystem & reduce supply overhang on UST,” he said.
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