Terra $LUNA Has Plummeted 99% Bringing Its Value To $0.20
LUNA began the road of its big epic downfall as many resistances became obsolete and supports were broken. Terra’s native token hit an all-time high of $119.5 on April 5th, exactly five weeks ago. It had already fallen below $0.2 and was trading around $0.2700 at the time of publication.
Terra ecosystem’s stablecoin—UST—too was in a fix, far from its $1 peg. At press time, it was merely worth $0.64. Having said that, it should be noted that UST’s state on Thursday was fairly better when compared to the lows at which it stood the day before [$0.225].
LUNA steps down for UST’s sake
Yesterday, Terraform Labs’ founder Do Kwon outlined his novel rescue plan to re-peg UST. Via a Twitter thread, he told that the only path forward was to absorb the stablecoin supply that intended to exit before UST could start to re-peg. He added that there was no other way out after accepting the community proposal. He said:
“The price stabilization mechanism is absorbing UST supply (over 10% of total supply), but the cost of absorbing so much stablecoins at the same time has stretched out the on-chain swap spread to 40%, and Luna price has diminished dramatically absorbing the arbs.”
The proposal, on its part, highlighted that allowing more efficient UST to burn and LUNA mint would put pressure on the latter’s price in the short term but would be an effective way to bring UST back on track.
LUNA minting has already begun and over the past day, the circulating supply has witnessed a massive jump from 377.5 million to a whopping 1.46 billion. If minting out of thin air continues at this pace, then LUNA would perhaps become entirely valueless soon.
Well, Terra of course cannot save both—the UST peg, and LUNA’s price—at the same time. With UST being chosen as the favorite kid, LUNA, without an option, has stepped down for UST’s stake.
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