BlockNews
  • Crypto
  • Finance
  • Politics
  • Memecoins
  • NFT
  • Technology
  • Opinion
No Result
View All Result
FOLLOW
BlockNews
  • Crypto
  • Finance
  • Politics
  • Memecoins
  • NFT
  • Technology
  • Opinion
No Result
View All Result
BlockNews

Goodnight Moon?

by BlockNews Team
June 27, 2022
in Crypto
A A
Goodnight Moon?
1
SHARES
Share on TwitterShare on Reddit

The Terra ecosystem is burning to the ground, or so it seems. Not only has its native cryptocurrency, $LUNA dropped up to 95% in the past week, but as of Wednesday, May 11th, its $UST decentralized stablecoin had crashed down to the shockingly low price of $0.25, down from its peg of $1.00. 

Even before the May 6th announcement by the Federal Reserve to raise interest rates by half of a percentage point – the biggest hike in two decades – there was already a lot of fear in the crypto market. Uncertain economic stability was already doing a great job of creating an off-risk environment, but after the news dropped, there was a noticeable upswing in price volatility across the board. No ecosystem; however, has been decimated more so than Terra has been this week, although some recent reports conclude this to be more of a coordinated attack rather than any fault of protocol’s own.

It appears as though at some point during the early hours of May 8th some crypto whales began offloading hundreds of millions of $UST on both Curve and Binance. As if that wasn’t suspect enough, concurrently these same people also began taking out short positions on $LUNA. If true, this does seem to dictate that this was some sort of planned attack against the Terra ecosystem.

Simply put, due to the inherent nature of Terra’s balanced programming, $UST is meant to maintain its peg by utilizing basic supply and demand to maintain it. In this case, with market pressure forcing $UST to begin losing its $1.00 peg, the protocol had to continue minting more $LUNA until $UST could reach its target price. So these market pressures between the Fed’s interest rate hike mixed with the recent whale activity pushed $LUNA’s price to amazingly lower lows. Moreover, these events led to a seemingly never-ending increase in retail investor FUD within the ecosystem, and the user incentives weren’t enough to make the bulk of investors risk anything more than they had already lost.

In addition to these incidences, there was yet another catalyst for falling prices. The Luna Foundation Guard (LFG) – their Singapore-based non-profit created to support and protect the ecosystem – had to entirely liquidate their 80,394 in Bitcoin reserves in hopes of regaining $UST’s peg. The LFG had been stacking BTC this past year to do exactly that; however, the crypto markets at this stage are already in a severely weakened state, and being forced into selling their reserves had the unintended side-effect of bringing down the price of BTC even more, which dragged the markets down even further.

All of these events fed off of each other creating an avalanche of negativity and mistrust in not only the protocol but the founders themselves as well. Do Kwon isn’t staying silent on the matter either and even though there is a lot of pressure on him from many investors for the unprecedented losses, he seems to be focused on the task at hand. Kwon, who is known for his consistent reliability in interacting with the Terra community, said on Twitter today that the only way Terra can move forward is to absorb the stablecoin supply of all those who want to exit before $UST can even begin to “re-peg”. 

He also stated that to combat the falling price of both coins and maintain homeostasis, he endorses community proposal 1164, which is meant to increase the minting capacity and therefore supposedly allow the system to absorb $UST more quickly.

Will Do Kwon be able to dig himself out of this? Of course, only time can tell but it seems as though there is still a lot of interest in Luna’s revival, albeit without UST, either way, it’s going to be a long road ahead.

Tags: $LUNA$USTBitcoincryptoterra
TweetShareShare

DON'T MISS THESE! HOT OFF THE PRESS

Ethereum ETH Hits Biggest Single Day Gain Since May 2024: Here is Why $3K is Next
Crypto

Ethereum ETH Hits Biggest Single Day Gain Since May 2024: Here is Why $3K is Next

May 8, 2025
Analysts Predict MOG Coin Could 4x as mog/acc Trend Gains Momentum With Elon Musk Endorsement
Crypto

Analysts Predict MOG Coin Could 4x as mog/acc Trend Gains Momentum With Elon Musk Endorsement

May 8, 2025
Stellar XLM Technical Indicators Suggest Imminent Breakout: Here is What You Need to Do
Crypto

Stellar XLM Technical Indicators Suggest Imminent Breakout: Here is What You Need to Do

May 8, 2025
$LTC in a Limbo: Is Litecoin Quietly Gearing Up for a Breakout?
Crypto

$LTC in a Limbo: Is Litecoin Quietly Gearing Up for a Breakout?

May 8, 2025
Cardano ADA On the Verge of a Major Comeback: Here are the Key Levels to Watch
Cardano

Cardano ADA On the Verge of a Major Comeback: Here are the Key Levels to Watch

May 8, 2025
$LINK on the Move: Is Chainlink About to Shake Off the Bears?
Chainlink

$LINK on the Move: Is Chainlink About to Shake Off the Bears?

May 8, 2025
Load More

Related News

Ethereum ETH Hits Biggest Single Day Gain Since May 2024: Here is Why $3K is Next

Ethereum ETH Hits Biggest Single Day Gain Since May 2024: Here is Why $3K is Next

May 8, 2025
Analysts Predict MOG Coin Could 4x as mog/acc Trend Gains Momentum With Elon Musk Endorsement

Analysts Predict MOG Coin Could 4x as mog/acc Trend Gains Momentum With Elon Musk Endorsement

May 8, 2025
Trump Say Upcoming U.S.-China Trade Negotiations May Lower 145% Tariffs: Here is Why

Trump Say Upcoming U.S.-China Trade Negotiations May Lower 145% Tariffs: Here is Why

May 8, 2025
Stellar XLM Technical Indicators Suggest Imminent Breakout: Here is What You Need to Do

Stellar XLM Technical Indicators Suggest Imminent Breakout: Here is What You Need to Do

May 8, 2025
$LTC in a Limbo: Is Litecoin Quietly Gearing Up for a Breakout?

$LTC in a Limbo: Is Litecoin Quietly Gearing Up for a Breakout?

May 8, 2025
Discord Twitter Youtube TikTok Instagram

BLOCKNEWS.COM

BlockNews

BlockNews.com is your premier source for real-time cryptocurrency, blockchain, and financial market news.

Our mission is to deliver accurate, timely, and insightful information to help both seasoned investors and newcomers navigate the evolving digital economy.

With in-depth analysis, exclusive insights, and up-to-date news, BlockNews.com keeps you informed on the latest trends in crypto, DeFi, NFTs, tech, and beyond.

Stay ahead of the herd with BlockNews.com

RESOURCES

  • About
  • Newsletter
  • Advertise
  • Terms and Conditions
  • Privacy Policy

POPULAR TOPICS

$ADA $XRP AI Avalanche Binance Bitcoin Bitcoin ETF blackrock Blockchain BTC Business Cardano China Coinbase crypto cryptocurrency Crypto Exchange Crypto Regulation DeFi Dogecoin Donald Trump Elon Musk ETF eth ethereum Federal Reserve FTX Gary Gensler grayscale Memecoin metaverse Microstrategy NFT NFTs PEPE ripple sec Shiba Inu Solana Stablecoin Technology twitter US Web3 xrp

GET QUICKER UPDATES ON X

© 2022-2025 BlockNews.com - Crypto and NFT news website by Aiur Labs.

No Result
View All Result
  • Home
  • Crypto
  • Memecoins
  • Technology
  • Politics
  • Finance
  • NFT
  • DeFi
  • Opinion

© 2022-2025 BlockNews.com - Crypto and NFT news website by Aiur Labs.