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Posted May 13, 2022

Matt Insley

By Matt Insley

Unstablecoin

stablecoin def

Stablecoin is, of course, meant to be stable. And since its inception in 2020, TerraUSD has been exactly that.

terra

As investors saw TerraUSD plummet from its expected dollar to just pennies, followed by it’s sister currency Luna plummeting to almost zero, the tokens once seen as a safe haven in the volatile world of cryptocurrency have come under fire.

The drop, which caused billions of dollars in losses, comes during an already gloomy week on Wall Street, leaving investors speculating whether Terraform Labs CEO, Do Kwon, will be able to turn the situation around and rally back to the $1 mark.

So, What happend?

The crash is said to come after a series of significant withdrawals from Anchor Protocol, a kind of crypto bank established by developers at Mr. Kwon's firm, Terraform Labs, were the cause for the decline, which began during the weekend of May 7-8 and snowballed the following day.

Digital currency investors use such services to earn interest on their coins by lending them out.

According to the Terraform website, investors have put in more than $14 billion in TerraUSD in Anchor by early May. The Anchor platform held the majority of the stablecoin's supply. TerraUSD's value plummeted from $1 throughout that May weekend due to large transactions. As a result of the volatility, many investors have pulled their TerraUSD from Anchor and sold the coin.

CEO Kwon Do has promised to fix TerraUSD, which trades under the symbol UST. He highlighted technical ways to reduce oversupply of the stablecoin and push price back up to $1 in a series of tweets on Wednesday, including posting his revival plan, which you can read here.

Carpe Crypto,

Matt Insley
Editor, Daily Crypto Hunter

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