Fears that TerraUSD (UST) will de-peg following weekend volatility have increased after it fell below $0.980.
The algorithmic stablecoin saw increased sell pressure on May 7 as more than $300 million in UST was sold via Curve Finance. Luna Foundation Guard (LFG) — supported by Terraform Labs CEO Do Kwon — issued $1.5 billion in reserves to protect the dollar peg on May 9.
In a statement, LFG declared it will loan $750 in Bitcoin (BTC) and $750 UST to market makers to defend the UST peg amid market volatility. The daily volume has hit $1.18 billion, and UST is currently in free fall.
Anchor protocol, the central staking platform for UST, has seen a decline in TVL of over 20% within the past 48 hours. It is down 11% in the past 24 hours, with borrow rates also down 8% and total collateral down 10% to just $4 billion.
Do Kwon vowed to protect the dollar peg of UST and use the $1.5 billion loan to ensure UST stays within 50bps of the dollar. However, with UST now dropping 200 bps, concerns of a sustained de-pegging event are rising.
The ability to swap UST on Curve Finance has been limited to BTC trading pairs, and apps such as Swissborg had to suspend UST withdrawals citing “maintenance for exchanges for UST.”
Swissborg also added a risk warning to UST, stating it is now a “volatile” asset.
$UST +/- 50 bips is pegged – will deploy capital on the fringes of that range to make markets
We are not out of that range rn, so dont believe significant action is needed.
— Do Kwon
(@stablekwon) May 9, 2022
The post Terra’s UST in free fall, drops 200 basis points against the dollar appeared first on CryptoSlate.
