Jakarta, CNBC Indonesia – Supporters of the Terra cryptocurrency project will bring crypto assets back to life with the new blockchain and LUNA token. The founders have also been looking for steps for the project which some time ago experienced the downfall.
It is known that the collapse of the Terra project caused a combined loss of around US$60 billion (Rp 876 trillion) between the stablecoin (UST) and LUNA. Earlier this month, the UST tumbled below the USD 1 peg, triggering a cryptocurrency sell-off.
Like many stablecoins, UST is pegged at a 1 to 1 ratio to the dollar. As for printing a new UST, it is necessary to destroy one LUNA.
That structure allows for the arbitrage opportunities that are key to keeping the stake. Where the user can always exchange one LUNA for UST and vice versa at a price of USD 1, regardless of the market price of both tokens at the time.
“What the LUNA ecosystem does is they have a very aggressive and optimistic monetary policy that works quite well when the market is doing really well. But they have a weak monetary policy when we face ‘the market is down’,” said Web3 investor Stuti Pandey, quoted by Reuters. CNBC International, Sunday (29/5/2022).
Meanwhile, Hartmann Capital’s managing partner, Felix Hartmann, said that the project was not certain to rebuild investor confidence.
“It will also require a lot of hard work from the founders of LUNA as they will no longer have the billion-dollar market cap they previously had. They will likely start all over again,” he added.
Not to mention, stablecoins are currently the main concern of regulators. This is due to the lack of transparency in stablecoin trading as well as the dependence of market participants on them to allow trading in other crypto protocols.
Crypto industry veteran and professor at Columbia Business School Omid Malekan insists that stablecoins as an idea are dead.
“There are others out there that are not as big as UST, and they are all in a state of failing to hold on to their current peg. That failure has made other, more conservative stablecoins seem very attractive. But the open question now is what kind of regulatory response the rest of the industry is getting ,” he concluded.
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Binance Funds at Terra LUNA: Previously IDR 23 T, Now IDR 34 Million
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