Yesterday was a bad day for the Terra ecosystem. Today is worse.
Heavy selling saw LUNA crash 97% to a low of $0.69 before bouncing to $2.50 in midday trading New York time.
A crisis of confidence in UST, Terra’s native stablecoin, has escalated after founder Do Kwon tweeted a recovery plan that would increase daily minting capacity from $293M to $1.2B in an attempt to absorb excess UST supply more quickly.
UST, which rebounded to $0.93 yesterday, reversed course and hit a low of $0.22. It’s currently trading around fifty cents on the dollar.
UST’s implosion marks a dark day for DeFi. Many users who attempted to ride out the bear market by parking their stablecoins in Anchor for its fixed yield find themselves saddled with a massive loss.
A rumoured bailout from Terra’s VC backers seems to have fallen through.