Stablecoin death spiral8/25/2023 ![]() “This morning, there is virtually nothing left.” In order for UST to re-peg, she said, buy orders from crypto traders will need to consume all of the asking price's liquidity to get it up to $1. “Once liquidity evaporated, this perpetuated the collapse of the stablecoin,” said Clara Medalie, research director at Kaiko, in an email. Some suspect that $1.5 billion won't even be enough, and it could take days, if not weeks, for UST to re-peg to the dollar. ![]() He's now attempting to raise $1.5 billion from new and old investors alike to provide more collateral to UST, hoping to rebuild the token's liquidity after it virtually disappeared from order books overnight. But one thing's for certain: Kwon isn't going down without a fight. It is full capitulation.”Įxactly why all of Terra's carefully-planned mechanisms failed to do their job remains unclear, and conspiracy theories abound about shadowy actors with untold wealth to play with. “Many people were caught off guard,” said Nikita Fadeev, partner and head of crypto fund Fasanara Digital, which de-risked its position in advance of the crash. Luna also fell considerably, dropping to as low as $2.35. But on Monday, all of the mechanisms that were supposed to keep UST stable, weren't - it fell to a low of 60 cents on that day, and reached a further low of around 20 cents in another crash on Wednesday, taking its market value down from $18.4 billion to $5 billion. A month ago, the future looked bright for Terra and its main backer Do Kwon: a consortium called the Luna Foundation Guard aimed at providing collateral for Luna - then at an all-time high value of $119 - had bought more than $1.5 billion in Bitcoin to shore up UST's peg, with its members reading like a Who's Who of crypto.
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