The downfall of cryptocurrency Luna and its sister stablecoin TerraUSD, co-invented by a Korean entrepreneur, has sent scare among Korean investors who have put big money into the coins that have risen to global fame to become world’s seventh largest in March.
According to CoinMarketCap based on Wednesday trade, Luna crashed about 97 percent to the $1 level, and TerraUSD to 60 cents. Their deep dive has exacerbated the free fall in the bearish crypto market amid faster tightening and recent tumble on Wall Street.
TerraUSD, or UST is an algorithm-based stablecoin meant to be pegged to the U.S. dollar. It uses a complex minting and burning system for supply adjustment and price stabilization. Traders swap between Luna and UST when the UST value goes above or below the 1:1 ratio, so it can hold to the U.S. dollar.
Every time $1 worth UST token is purchased, $1 worth of Luna is burned, and vice versa.
But recently, UST prices tumbled to below $1, causing a free fall of the Luna and then a drop in the value of the two coins.
Luna was developed by Do Kwon, founder and CEO of Terraform Labs. The company is headquartered in Singapore, but Korean investors have shown much interest to the coin created by a Korean. Before the recent crash, Luna was valued at $119 last month, becoming the eighth-largest coin in the global market. The token lost nearly 97 percent of its value in the recent week.
Bitcoin prices also were down to below $30,000. Avalanche lost 30 percent of its value, Solana 20 percent, and Aave 24 percent.
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