Here’s what really happened to the crypto Terra Luna

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The Terra blockchain was launched in April 2019 by two Korean entrepreneurs, Do Kwon and Daniel Shin. Terra offers various stablecoins, including TerraUSD, as part of a global payment platform. Terra’s native cryptographic token, LUNA, was used for several purposes, including picketing, governance, and as part of the supply control mechanism that kept algorithmic stablecoins anchored to their Fiat equivalents.

The idea was to use a complex arbitration mechanism that supported the dollar peg so that laterization is no longer necessary. Unfortunately, owned by TerraUSD and LUNA, the mechanism is not bomb proof. Any initiation of the month 2022 if there is apparently Harmful market activity. A group of large investors improvised huge volume UST sales on various platforms, and also sold LUNA. In the subsequent downward spiral of UST and LUNA prices, the demand for both tokens evaporated.

The original Earth network is now known as Luna Classic (quote LUNA) and is nearly inactive. The new Earth network product arrives Hard Fork of the Code no longer offering algorithmic Stablecoins. Terra was the second largest cryptocurrency network after Ethereum. Terra’s unexpected roll has led many observers to question the reliability of the value of market capitalization as a sufficient indicator of the legitimacy and health of the crypto network.

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In addition, as a marketing strategy, the Terra Network adopted the Pegging protocol, which created demand by promising consumers a 20% APY (annual percentage return) guarantee. In March 2022, Mr. Kwon announced that he would lower the income rate to make it sustainable at the pace, realizing that the initial 20% income was unrealistic.

How Stable Is The Stablecoin?

Works with Fiat’s stablecoin guarantee, the value of the riser value has an impact on the value of the stablecoin. As the United States struggles with rising inflation rates (9.1% yoy as of June 2022), the value of the stablecoin with collateral fiat, tether or USD currency is also inflationary. The variation of the underlying asset dutta all can reduce the stability of the cryptocurrency. In reality, the stablecoin may not be as stable as it looks.

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So how about comparing the stablecoin?

Le Monete stables provide an uninteresting proof of concept, so much so that our economy could move towards a future without cashanti, but they offer no noteworthy Benefits at this time. If you are interested in the increase, and not for the motivation to use the stablecoin, you will need the equivalent products offered by the certificate of the financial institution. Make sure the stablecoin you own is sufficiently guaranteed.

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