Things seem to be getting from bad to worse for the Terra ecosystem as the LUNA price continues its further correction. In the last 24-hours, LUNA lost another 57% and is currently trading at $16.71. On the other hand, the UST continues to de-peg and is currently at $0.80.
The TerraUSD (UST) stablecoin has shown major volatility in the last 24 hours making wild swings between $0.60 to $1.0. On the other hand, the total-value-locked (TVL) in DeFi on the Terra blockchain has dropped by 52% in the last 24-hours.
As we know UST is an algorithmic stablecoin. Thus, as UST continues to trade under $1.0, more and more LUNA gets minted into the ecosystem resulting in excess supply over demand. Due to this, the LUNA price has tanked more than 80% on the weekly charts, a majority of the correction happening in the last four days.
The Luna Foundation Guard has already initiated some corrective measures. It decided to loan $750 of its Bitcoin reserves as well as $750 million in UST. However, this doesn’t seem enough at this stage, looking at the nature of the continued selling of UST. On the other hand, popular crypto exchanges like Binance suspended withdrawals for LUNA and UST on Monday.
Terra Founder Working on a Recovery Plan
Although things seem to be pretty bad for the Terra ecosystem at this stage, founder Do Kwon is holding his horses. A few hours back, Do Kown tweeted that it’s working on a recovery plan for Terra’s UST stablecoin.
Close to announcing a recovery plan for $UST. Hang tight.
— Do Kwon 🌕 (@stablekwon) May 10, 2022
Rumors in the crypto world suggest that Terra’s parent organization – Luna Foundation Guard – is reaching out to crypto investors to raise $1 billion to protect the UST stablecoin. Sources familiar with the matter said that LFG is having active discussions with some of the industry’s largest investment firms and market makers.
All eyes are whether on Do Kwon can pull this off and get Terra out of the troubled waters. The recent UST crash has also drawn the attention of U.S. lawmakers.
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