Dissecting Crisis — A Deep Dive Into the Terra LUNA Recovery Plan
The dramatic crash of over 99.9999% of LUNA and the depeg of UST which now trades at only $0.16, has wiped out over $40 billion in investments.
On their way down, UST and LUNA have also destroyed much of the public trust in Terra Labs as well as a considerable portion of the Terra blockchain infrastructure.
Following the UST crash, the blockchain attempted to re-peg the ahem.. stablecoin by burning UST and minting LUNA. The chain minted over 6,500,000,000,000 LUNA in a matter of days, severely diluting any prior value the LUNA token had, while also failing to re-establish the UST peg.
UPDATE: Now that Terra 2.0 is live — does it actually deserve a second chance? Read more.
The Terra LUNA Recovery plan
Terra stops minting LUNA — UST is left for dead
Terra has stopped minting LUNA on May 14 and the price seems to have finally stabilised at around $0.0003. However, this means that UST has essentially been abandoned and left to die since the minting mechanism will no longer attempt to support UST to regain its peg. Since UST is not backed by an underlying asset, without the minting it’s pretty much game.
