TerraUSD (UST) lost parity with the dollar and fell 30% last Monday.

Veny Cespedes West

Luna Foundation lends $1.5 billion to save TerraUSD (UST), which shows that the algorithm that maintains parity with the US dollar is not working very well.

https://img.particlenews.com/image.php?url=1MvdV6_0fZdFqWt00
// Veny Wes for NewsBreak

UST suffered on Monday a "sell-off attack" that gave Terra action for the use of its giant Bitcoin (BTC) reserves to shore up its parity with the dollar. Initial liquid injection measures for TerraUSD (UST) proved insufficient and fell to lows of USD 0.68, according to data shown on CoinMarketCap.

During periods of high volatility and one-sided buy/sell activity for UST, the above stabilizer may not be sufficient to maintain the peg in the short-term. – David Moreno, CryptoCompare.

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CoinMarketCap // Veny West - NewsBreak

A problem presented by algorithmic stablecoins is that the dual model partially complies with the principles since both currencies do not yet have great transactional use. In addition, this caused Binance to raise the BTC/UST pair disproportionately, reaching the high of $50,000 UST for each Bitcoin.

Which has caused a massive surge in BTCUST (Not Bitcoin valued in dollars, but valued in the UST stablecoin) - @BCBacker / Twitter

What is UST?

It's a stablecoin of the Terra blockchain. UST is created using smart contracts, by destroying a brother token known as Luna.

Stablecoins such as Tether (USDT) and Binance USD (BUSD) are backed by fiat money, minerals or other traditional assets, while algorithmic ones are called "seigniorage", (no backing or backed by other cryptos).

At the time of writing, the price of TerraUSD (UST) is hovering around $0.78.

Disclaimer: The information provided in this section does not represent investment advice.Sources: Twitter, CoinMarketCap, TradingView, CryptoCompare, Binance,

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Hello, I'm Veny West, a journalist in the crypto world. I deliver unbiased news with valuable information about the world of web3. ¡Pura Vida! ₿

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