News of LUNAs death are greatly exaggerated

Read Time:1 Minute

-The role of stablecoins has come into question after recent market turmoil
-TerraUSD (UST) has failed to maintain its peg to the US dollar
-The Terraform Labs PTE Ltd. project was relying on incentives rather than a dollar peg to keep the stablecoin’s price stable
-When the UST’s price falls below a dollar, its units are taken out of circulation in order to ‘burn’ them and convert them into LUNA
-LUNA is now down 100% in the past 24 hours
-Terraform CEO Do Kwon indicated that LUNA would be the sacrificial lamb in order to mitigate USTs free fall
-Kwon said that the only path forward will be to absorb the stablecoin supply that wants to exit before UST can start to repeg
-The increased LUNA supply will be sold on the open market in order to raise funds and rescue the UST peg
-When UST is worth more than a dollar, LUNA tokens are ‘burned’ or enter circulation
-Some are questioning the viability of stablecoins themselves, irrespective of a straight dollar peg or not
-US Treasury Secretary Janet Yellen highlighted the risks these coins presented to the financial system and called for regulation
-The Federal Reserve estimated that the value of stablecoins ‘grew rapidly over the past year,’ topping US$180 billion in March
-The stablecoin sector remained highly concentrated, with the three largest stablecoin issuersTether (USDT), USD Coin (USDC), and Binance USD (BUSD)constituting more than 80 percent of the total market value

 

https://forkast.news/wp-content/uploads/2022/05/market-1260×945.jpg

market News of LUNAs death are greatly exaggerated
News of LUNAs death are greatly exaggerated 2

Leave a Reply