Disclaimer: The datasets shared in the following article have been compiled from a set of online resources and do not reflect AMBCrypto’s own research on the subject.
The Terra USD stablecoin and the LUNA coin, both introduced in 2019, were created by Terraform Labs. TerraUSD used to be pegged to LUNA to stabilize its price. There have been many ups and downs in the voyage of this pair of coins, UST and LUNC. Do Kwon and Daniel Shin, two South Korean businessmen, launched Terraform Labs in Seoul in 2018. They introduced UST, a native stablecoin tied to LUNA, in 2019.
Here’s AMBCrypto’s Price Prediction for LUNA for 2023-24
Stablecoins like UST were introduced to protect investors from the extreme price volatility of popular cryptocurrencies like Bitcoin. Especially since a stablecoin has a ‘fixed’ price.
As fiat currency is pegged to reserves such as gold, a stablecoin is pegged to either a fiat currency (e.g. USD) or a supporting cryptocurrency. In this case, TerraUSD was pegged to Luna. But herein lies the conflict. A cryptocurrency isn’t an equivalent to gold reserves. As Luna prices got destabilized, it had an impact on UST prices too, and the entire stablecoin system collapsed in the second quarter of 2022.
The stablecoin project was aimed at complementing the price stability and wide adoption of fiat currencies with the decentralized model of cryptocurrency.
Even those who are only vaguely familiar with the cryptocurrency industry know of the apocalyptic collapse of LUNA and UST in May 2022. This collapse was crucial in instigating the cryptocurrency crisis thereafter.
LUNA was one of the market’s top performers once, with the altcoin once among the top 10 cryptocurrencies by market value towards the end of 2021.
A Bloomberg report from May 2022 sheds light on the further developments that transpired. It was in early May 2022 that the Terra system collapsed as large investors began selling their tokens. The move caused a…
