Terra’s biggest stablecoin briefly lost its peg. Supporters claim it was a coordinated attack, but critics disagree
The price of Earth (LUNA) plunged more than 14% in the past 24 hours, becoming the worst performing cryptocurrency among major altcoins.
It is now close to dropping below Terra’s native UST stablecoin. The two cryptocurrencies are currently valued at $21.9 billion and $18.9 billion.
On Saturday, Terra briefly lost its peg after someone dumped $300 million worth of UST tokens on Curve and Binance. DeFi Expert Route 2 Fi (@Route2FI) is convinced that the linkage will be restored since there is “enough money” in the system to back it up.
Some “LUNAtics” believe that it was a “coordinated attack” that was orchestrated by a single player in order to cause damage to the popular blockchain project.
“Bitfinex’ed,” the pseudonymous blogger and prolific critic of the cryptocurrency industry, noted that removing tokens you own “fairly and squarely” is actually not a coordinated attack.
Do Kwon, co-founder of Terra, dismissed these concerns on Twitter, claiming that he “loves chaos.”
Kwon, however, was mocked by some Twitter users for alleging that the 62% “other” portion of the now-deleted pie chart was a single entity to support his conspiracy theory.
UST has already become the third-largest stablecoin by market value, surpassing However, some critics warn that algorithmic stablecoins are inherently fragile since they are not backed by dollars. It uses a complex arbitrage system in order to maintain its peg.
After acknowledging the risk of the two-coin system, Terra also recently decided to add Bitcoin reserves. In this way, he wants to ensure the stability of the stablecoin during market turmoil.
Earlier this week, Luna Foundation Guard (LFG) announced another $1.5 billion Bitcoin purchase, but it failed to move the market.
