UST trend this week (Figure from: Binance)
Additionally, for Luna, Binance has also suspended all cross/orphan margin trading. Soon after, Terraform Labs announced it had frozen the Terra blockchain and was working on a restructuring plan.
It should be noted that this is the second time the Terra blockchain has been frozen. Earlier on Thursday, Terraform Labs claimed to have suspended the network to prevent any kind of hacking.
It is reported that TerraUSD (UST) aims to enable the former to become an algorithmic stablecoin pegged to the U.S. dollar by intertwining with the LUNA token, which has no fixed value.
If the value of UST falls below $1, the Terra network will consume LUNA to feed back the stablecoin. If UST exceeds $1, the algorithm can balance its value by creating more LUNA tokens.
However, when TerraUSD dipped below $1 earlier this week, the blockchain network’s algorithms began to take a hit and lead to an eventual collapse.
As the crypto community lost confidence, the panic sell-off took the price of the LUNA token from around $80 earlier this week to a near-worthless $0.0000011.
As of press time, UST’s currency value is only 3 cents left. Although Terraform Labs has been trying to find a solution to the problem — including seeking more than $1 billion in financing — it has unfortunately not been able to turn around.
