Terra Gets Grounded
Market Meditations | May 10, 2022
As usual, when the Bitcoin price struggles, most altcoins do the same. This weekend was no exception. The Terra network caught its fair share of FUD (fear, uncertainty, doubt) the past few days as a whale’s offloading resulted in the temporary destabilization of Terra’s native stablecoin, UST.
- Luna’s price plunged over 20% this weekend when news of a $285 million dollar sell off of the network’s stablecoin, UST, spread like wildfire across social media. The move down marked the lowest level seen in three months.
- UST also briefly de-pegged, falling from $1.00 to $0.98, before rebounding to within a fraction of a penny yesterday.
- Some people labeled the massive UST sell-off responsible for the fleeting de-peg as an attack. Though no technically illegal activity is suspected, collusion appears to be a popular theory amongst Terra bulls.
Do Kwon was quick to take to Twitter in defense of the Terra network, posting memes and rhetoric highlighting UST’s alacritous return toward its $1.00 peg. The suspicion of a coordinated sell-off and FUD (fear, uncertainty, doubt) activity fits the narrative of the so-called stablecoin wars currently underway.
UST has become all but synonymous with an 19-20% yield thanks to Anchor Protocol’s rewards offering, but may have also inherited a target on its back as other stablecoins begin to consider strategies to consistently offer competitive yields.