Posts about UST
This is a follow up post to when I noticed it was down 3% which is incredibly dangerous for a stablecoin.
At this point it's a question of - "will the bleeding stop" or will UST/Terra Rug itself out of existence?
Two months ago /u/cwm9 made a very detailed post about his concerns with UST. Which outlined a scenario exactly like this.
But go the other way: when people start selling their UST because they want to go back to bitcoin, they mint Luna and sell it. Now the price of Luna goes down. The fact that the price is going down and total coins minted is rising encourages the selling of Luna making the price drop farther. If the price drops too far, it can no longer support the burning of UST to get a dollar by selling Luna.
The response from Reddit was - well yah that's supply/demand + Terra is a lot more than UST there is a whole ecosystem.
Additionally Terra began buying BTC reserves and had over $1B in reserves to prepare for this scenario.
At this point the question isn't will the peg break? The BTC reserves of $1B are likely all gone and nothing is probably left. Nearly 3B in volume in the last 24 hours. The question is, is this the end of Terra?
A year ago today Terra USD began it's final depeg from $1 with the price sitting at $.9999 after two days of fighting to hold the peg, the price plunged down to $.80 and then $.16 by the end of the week. A year later the price of the unbacked stablecoin sits at $.018.
https://i.redd.it/5czta9om28ya1.pngLuna was sitting at $77.47 a year ago today a week later the circulating supply increased from 342M to 6.5T in one week with the price dropping to $.0001. The current price today is $.00009
Terra Luna - 1 year chartThis post shows the one year increase in the circulating supply. Notice the huge spike at the beginning coincided with the last days of the depeg. 342M to 6.5T
https://messari.io/asset/terra-luna-classic/chart/sply-circThis post detailed what was happening when Terra USD depegged and was a warning for people not to buy.
UST and Luna price are directly related - You can burn Luna and mint UST, or you can burn UST and mint Luna. On May 8th (not including any fees you could burn about 60 UST ($60) to get 1 Luna ($60) - when UST started depegging people became financially incentivized to burn UST and convert it to Luna - increasing the supply of Luna. Since demand isn't keeping up with the increased supply - the price of Luna is continuing to crash. Currently with 1 UST worth $.55 and 1 Luna worth $.0058 (not including fees you can mint 330.57 Luna for $1 (true dollar) of UST.
No post on the failure of Luna would be complete without the "FUD post" that aged like fine wine. On March 10th 2022, two months before the final depeg a Reddit User by the name of /u/cwm9 wrote a post challenging the CryptoCurrency Reddit community to explain why Terra Luna wasn't a scam. In that post he created a hypothetical of what would happen to Terra in the event of a depeg which was contrary to the narrative being spread about a depeg event, and to his credit it happened exactly as they suggested.
But go the other way: when people start selling their UST because they want to go back to bitcoin, they mint Luna and sell it. Now the price of Luna goes down. The fact that the price is going down and total coins minted is rising encourages the selling of Luna making the price drop farther. If the price drops too far, it can no longer support the burning of UST to get a dollar by selling Luna.
