Why has the LUNA coin lost most of its value?

Above social network TwitterMr. Kwon admitted to the Terra investor community (LUNA) that the UST price has de-peg to 0.5 USD instead of continuing to maintain the 1 USD level. “De-peg” is a term that refers to the removal of a previously fixed rate on a currency. Previously, 1 UST was pegged to 1 USD.

When UST de-peg, a part of investors converted UST to LUNA according to stablecoin balance algorithm, thereby cutting supply. However, the sudden increase in conversion volume, the recent imbalance, plus the strong “dink” of the LUNA coin made this duo fall into a precarious situation.

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The LUNA coin lost most of its value

To make sure the new changes are on track and save the day, “the only way is to absorb the supply stablecoins want to leave,” Do Kwon emphasized.

At the same time, Mr. Kwon proposed a series of measures to Terra can collect UST and reduce the supply in the market, according to the mechanism of “anchor to absorb supply”. Among those measures include increasing the minting/burning rate of LUNA/UST to 1.2 billion tokens/day in exchange for the amount of UST collected.

And finally, CEO Terra noted that UST’s mechanism will be adjusted to have collateral.

Thus, the solution of Luna Foundation Guard to save UST starts from issuing more LUNA and spending money to buy sold-out UST. In other words, LUNA had to sacrifice to save UST.

Recorded from the data of Coin Market Cap At 9 a.m. on May 12, UST gradually stabilized, while LUNA continued to stand close to the edge of the abyss.

With the amount of pending orders to withdraw LUNA and UST overloaded and causing severe network congestion, Binance, the largest cryptocurrency exchange world, has announced to stop supporting the withdrawal of these two coins. At the same time in Terra’s hometown, the two biggest exchanges KoreaUpbit and Bithumb, have put LUNA under monitoring, considered stopping trading, and advised users to be careful before deciding to buy this coin.