Of the stablecoin Terra briefly lost its peg to yesterday’s price due to increased selling pressure and credit demand.
The central theses
- Terra’s UST lost its peg to the US dollar again this weekend, falling as low as $0.985.
- The Depeg event came after a series of multi-million dollar UST sell-offs.
- UST saw a slight rebound shortly after Terraform Labs CEO Do Kwon posted a tweet calling out the stablecoin’s critics.
Terras UST experienced a similar Depeg event during a market-wide meltdown in May 2021.
More problems for UST
It’s been an eventful weekend for the Terra ecosystem.
Layer 1 UST stablecoinBlockchain fell below $1 early Sunday amid high-pressure market conditions. The decentralized coin, which aims to track the price of the US dollar using a dual token mechanism with Terra, briefly traded as low as $0.985 before staging a short-lived recovery.
According to data from CoinGecko, it is trading at around $0.993 at press time.
The deprecation came after UST was hit by a series of multimillion-dollar selloffs. On-chain data shows that an account at Curve Finance traded about $85 million worth of UST, while another user reportedly sold $108 million worth of UST on Binance.
The number of swaps on Curve later increased, sparking a small form of “bank run,” in which holders of an asset collectively withdraw their funds out of fear of bankruptcy problems.
At one point, Curve’s pool of 3 was so unbalanced that UST made up over 60% of the pool (stablecoin pool ratios are generally considered to be much healthier when both coins are equally balanced).
As noted by Twitter user and crypto analyst 0xSisyphus, Binance briefly halted UST borrowing, likely to prevent customers from borrowing their assets to receive discounted UST, which they trade on Curve as arbitrage could use.
Elsewhere in the Terra ecosystem, UST borrowing rose through the Anchor Protocol, the most widely used DeFi-Application of the blockchain, to over 2 billion dollars. Terra’s native asset LUNA also fell 13%, falling as low as $62.60. At press time, it is trading closer to $61.50.
Terra stablecoin is picking up, as is Kwon Surfaces
As rumors circulated on Twitter and the market showed signs of panic, Do Kwon, CEO of Terraform Labs and the self-proclaimed “Master of Stablecoin,” emerged to allay concerns about a possible Depeg crisis.
“I’m up – fun morning… Anon, you could be listening to CT influensooors about UST depegging for the 69th time… Or you might remember they’re all poor now and go for a run instead… Wyd.”
He tweeted before posting anything that could be construed as a sexist comment, urging his critics to show respect for his time zone. “If you girls wanna be fun please try during my waking hours,” he wrote, adding a long list of controversial tweets he’s posted over the past few months.
Make kwon tweets
Shortly after Kwon’s tweet, UST began to recover. On-chain data shows that one address traded over 57,000 tokens worth over $146 million around the same time USDT and then traded the stablecoin for UST on Curve, likely in an attempt to rebalance the pool and bring its price closer to $1. The same address also sent 20,000 Ethereum to Binance.
Interestingly, this weekend’s chaos isn’t the first time UST has faced problems. In May 2021, when the cryptocurrency market experienced its latest brutal crash, UST fell as low as $0.96. The incident sparked fears that the stablecoin could one day go bankrupt, effectively killing Terra.
Aside from the UST incident, it’s been a disastrous weekend for Kwon and Terraform Labs. On Saturday, Crypto briefing revealed that the company had threatened legal action over a satirical April Fool’s Day article that mentioned Kwon.
Crypto briefingThe editor-in-chief of , Chris Williams, shared the full details of the letter he received from Terraform Labs’ attorneys on Twitter, sparking widespread criticism of the company’s centralization and ill-considered public relations blunder.
Source: Crypto News Deutsch