Terra is a decentralized financial payment network that rebuilds the traditional payment stack on the blockchain. Luna is the reserve currency of the Terra platform. It has three core functions: i) mine Terra transactions through staking, ii) ensure the price stability of Terra stablecoins and iii) provide incentives for the platform’s blockchain validators.
The move came amid a plunge in prices for LUNA and UST, which lost its parity with the dollar for the third time. Binance cited network a network refers to all nodes in the operation of a blockchain at any given moment in time. congestion.
The world’s largest cryptocurrency exchange, Binance momentarily suspended the withdrawals for the tokens native to the ecosystem of Earth during the early hours of Tuesday morning citing network congestion.
In a statement posted on its official blog, the company indicated the discontinuation of withdrawals of LUNA, the cryptocurrency native to Earth, and UST, the algorithmic stablecoin of the project. The suspension started at 02:20 a.m. (UTC) ” due to a high volume how much cryptocurrency has been traded over a set period, such as the past 24 hours. of pending withdrawal transactions “, dijo Binance . “ This is caused by network slowness and congestion. “.
We will continue to monitor the network conditions and provide further updates here if required.
– Binance (@binance) May 10, 2022
The exchange businesses that allow customers to trade cryptocurrencies for fiat money or other cryptocurrencies. reinstated withdrawals of both currencies about 6 hours later, according to the timing of the Twitter posts. ” Recalls to and on the Terra network have now resumed. We will continue to monitor network conditions and will provide further updates via this channel if necessary. “the company said in a tweet .
UST Collapses and Loses Parity with the Dollar
The measure of Binance coincided with a sharp drop in the price of the tokens for Earth . LUNA recorded a significant 60% decline that saw it drop from a price of USD $60 to a low of USD $24 in a span of 15 hours. By the time of editing, the cryptocurrency has recovered slightly from that level and is trading around USD $33, a drop of 44% in the last 24 hours.
Meanwhile, the stable currency of Earth was volatile once again, losing its expected level of USD $1. As reported by DiarioBitcoin , USD Land (UST) had been facing difficulties in maintaining its parity with the U.S. dollar since the weekend. However, the situation became more unstable on Monday evening, when la stablecoin a cryptocurrency with extremely low volatility, sometimes used as a means of portfolio diversification. Examples include gold-backed cryptocurrency or fiat-pegged cryptocurrency. fell to USD $0.68.
While the currency currency is a medium of exchange that defines value. has since recovered, UST still seems to struggle to maintain parity with the dollar, and remains below the expected level, at USD $0.93, according to data from CoinMarketCap .
Given how closely linked LUNA and UST are, it is possible that the price collapse of LUNA has had an impact on UST. LUNA’s price plunge, which represents a 71% drop from its all-time high of USD $116 in early April this year, also comes amid a larger correction a correction is a pullback of an asset’s price of at least 10% to adjust for over-valuation. in the cryptocurrency cryptocurrencies are digital currencies that use cryptographic technologies to secure their operation. market.
It should be noted that UST relies on LUNA to maintain its 1:1 link to the US dollar through a set of minting and burning destroying a certain number of digital coins to reduce their issue. This method is used to fight inflation and increase the value of cryptocurrency. All token burning transactions are recorded in the blockchain as a transaction. Therefore, anyone can verify that the coins were destroyed. mechanisms. Although the project has recently begun purchasing Bitcoin the biggest and most popular cryptocurrency in the world. It is a decentralized digital currency that enables users to make trustless peer-to-peer transactions. y Avalanche as a way to partially support the opposite of Resistance, it is a threshold that crypto’s price doesn’t fall below. UST. The goal of Earth long-term is to maintain USD $10 billion of Bitcoin in your reserves.
Terra sells Bitcoin to rescind UST
UST’s most recent termination is the third in the last 3 days. The stablecoin had experienced volatility a statistical measure of dispersion of returns, measured by using the standard deviation or variance between returns from that same security or market index. over the weekend after several withdrawals of significant amounts of UST were recorded on decentralized decentralization refers to the property of a system in which nodes or actors work in concert in a distributed fashion to achieve a common goal. finance platforms (DeFi).
As a result of the loss of its parity with the dollar, Luna Foundation Guard (LFG), a non-profit organization that supports the Earth , anunció el lunes planes de deploy USD $750 million of Bitcoin of its reserves to buy UST and guarantee its parity. .
Do Kwon, founder of Earth took to Twitter on Monday to explain that the proposal would sell a small amount of Bitcoin to buy UST, and after the market an area or arena, online or offline, in which commercial dealings are conducted. stabilized, he would use UST to buy BTC again. Kwon also assured that Earth wasn’t trying to get rid of its reserves of the flagship cryptocurrency.
The project appeared to extend these efforts later Monday, after realizing that the stablecoin continued to struggle to maintain its $1 level. According to CoinDesk , LFG deployed another USD $800 million in BTC from its reserves . While that publication indicated that the sale had completely depleted the BTC reserves of Earth the organization itself clarified que still maintains little more than 70.000 bitcoins valued at $2.249 billion at the time of going to press.
The massive sale of bitcoins coincided with a collapse in market prices that has seen the leading cryptocurrency fall more than 50% from its all-time price high of USD $69,000, to trade around $31,000 this Tuesday.
- Terra to lend USD $750 million in Bitcoin from its reserves to protect UST parity
- Terra’s UST stablecoin faces difficulties to maintain its parity with the dollar
- Terra buys more Bitcoin and reaches short-term goal: already holds $3.5 billion in BTC
Article by Hannah Estefania Perez / DiarioBitcoin
Imagen de Unsplash