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UST Stablecoin Crisis Spreads to Other Algorithmic Stablecoin Protocols

Updated: May 17, 2022

Daily Market Wrap

  • Crypto market cap: 1.20 trillion, up 1.79%

  • BTC price stands at USD 30,060, up 4.23%

  • ETH price stands at USD 2,058, up 0.43%

  • Top gainer: Maker (MKR), up 45.14%

  • Top loser: TerraUSD (UST), down 72.52%

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Why it matters:

  • Other smaller algorithmic stablecoins such as FRAX, FEI, and USDN are facing the same danger during the aftermath of Terra’s UST stablecoin

  • Neutrino USD (USDN), the Waves blockchain’s algorithmic stablecoin, dropped below $1 U.S. dollar peg as low as 23 cents

  • A daily report from Crypto research firm Delphi Digital showed that USDN has the less stability during the recent market dip as its design is similar to Terra’s UST stablecoin

Crypto daily spotlight

Brief introduction: Terra is a decentralized stablecoin blockchain that uses fiat-pegged stablecoins to power price-stable global payments systems. Terra’s native token LUNA is used to stabilize the price of the protocol’s stablecoins.

Why it matters:

  • A tweet from Terraform Labs said the network’s validators “will coordinate” to restart the network shortly after the halt at a block height of 7603700

  • LUNA’s price plummeted to $0.01 at press time owing to the severely high inflation

  • The UST stablecoin, which has failed to recover the peg back to $1 U.S. dollar for 4 days, is still struggling to bounce back in the range of around $ 0.3

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