UST

ProShares Ultra 7-10 Year Treasury

55.58
USD
0.98%
55.58
USD
0.98%
49.53 72.06
52 weeks
52 weeks

Mkt Cap 16.67M

Shares Out 300.00K

Chat
Send me real-time posts from this site at my email

Why Terra (Luna) and UST Coin Are Soaring Today

What happened Earlier this month, the Terra (CRYPTO: LUNA) blockchain effectively collapsed. The breakdown started when stablecoin TerraUSD (CRYPTO: UST) lost its peg to the U.S. dollar and the built-in arbitrage mechanism failed to resolve the problem. At that point, panicked investors started selling Luna and TerraUSD hand over fist. However, Terraform Labs founder Do Kwon has a plan to revive the broken blockchain, and optimism surrounding that plan has both coins soaring today. As of 3:00 pm ET, Luna and UST were up 62% and 25%, respectively, in the last 24 hours. So what Kwon discussed his revival plan for Terra in a recent blog post. Specifically, the blockchain will be forked to create a new chain, but the new chain will not include the UST stablecoin. Kwon's plan also outlines the creation of 1 billion new Luna coins, which will be distributed among developers alongside pre- and post-crash holders of Luna and UST. The voting period is still open, but the proposal has already surpassed the threshold for adoption, and the fork is set to take place on May 27. At that time, the old chain and cryptocurrency will be known as Terra Classic and Luna Classic, while the new chain and cryptocurrency will be known as Terra and Luna. Of course, Kwon's proposal does not guarantee that investors will recoup all crash-related losses. The market will have to decide what the new Luna coin is worth. Now what Terra was once a thriving ecosystem of decentralized finance (DeFi) services. Anchor (CRYPTO: ANC) was the crown jewel, a lending protocol that paid 20% interest on UST deposits. But the platform included a number of other noteworthy applications. The Mirror protocol allowed investors to trade synthetic assets, and the Chai payments app had over 2 million users in South Korea. After the blockchain's collapse, the future of the Terra ecosystem is questionable at best. The relationship between UST and Luna was the primary source of value. DeFi products like Anchor were designed to drive demand for UST, and Luna was designed to absorb stablecoin price volatility. To that end, Luna was supposed to become more valuable as demand for UST increased. Instead, the opposite happened and investors lost over $40 billion. Even if the new blockchain earns the trust of the crypto community, Terra won't be the same without its native stablecoin. For that reason, I think this is a "watch and wait" situation. Terra may regain its former glory, or it may fade into the background of the crypto industry. 10 stocks we like better than Terra When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Terra wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of April 27, 2022 Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Terra. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue