Terra’s UST in free fall, drops 200 basis points against the dollar |

Terra’s UST in free fall, drops 200 basis points against the dollar |

The US dollar index is down, but the USD-backed Terra token sits on top of the charts. How global markets are reacting to this news could mean big things for crypto enthusiasts, as well as those looking to make a quick buck off its volatility.

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Terra’s UST in free fall, drops 200 basis points against the dollar |

After falling below Fears that TerraUSD (UST) will de-peg following weekend volatility have increased after it fell below $0.980..980, fears that TerraUSD (UST) would de-peg as a result of weekend volatility have grown.

On May 7, more than $300 million in UST was sold through Curve Finance, increasing sell pressure on the algorithmic stablecoin. On May 9, the Luna Foundation Guard (LFG), led by Terraform Labs CEO Do Kwon, released $1.5 billion in reserves to safeguard the dollar peg.

LFG said in a statement that it would lend market makers $750 in Bitcoin (BTC) and $750 UST to protect the UST peg amid market volatility. UST is now in free descent, with daily volume reaching $1.18 billion.

Terra’s UST in free fall, drops 200 basis points against the dollar |TradingView (source)

Within the last 48 hours, the TVL of Anchor protocol, UST’s key staking platform, has dropped by over 20%. It has dropped 11% in the last 24 hours, with borrow rates falling 8% and total collateral falling 10% to barely $4 billion.

Terra’s UST in free fall, drops 200 basis points against the dollar |Anchor is the source of this information.

Do Kwon promised to safeguard UST’s currency peg and utilize the $1.5 billion loan to keep UST within 50 basis points of the dollar. However, with UST now down 200 basis points, fears of a long-term de-pegging event are growing.

Curve Finance’s capacity to trade UST has been restricted to BTC trading pairs, while applications like Swissborg have had to stop UST withdrawals due to “maintenance for UST exchanges.”

Swissborg has issued a risk warning to UST, indicating that the asset is now “volatile.”

$UST is fixed at +/- 50 basis points; money will be deployed on the outskirts of that range to form markets.

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We are still inside that range, therefore no immediate action is required.

May 9, 2022 — Do Kwon (@stablekwon)

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