A crypto custodian, which was placed under receivership in July, incurred a loss of $76 million due to a separate wallet mishap in 2021, as stated in a court submission.
Terraform Labs contended that the sale of UST to retail investors did not involve any contractual obligations.
Open interest has experienced a remarkable upswing, reaching an impressive $11 billion, marking its highest level in over a year.
In Terra’s case, the protocol utilizes a dual token mechanism to capture value and stabilize the price of its stablecoins. If UST deviates from its peg, the system uses LUNA to stabilize the price of UST by agreeing to counter-party anyone looking to swap UST and LUNA at UST’s target exchange rate of one U.S. dollar.
“While UST [the terra stablecoin] has been the central narrative of terra’s growth story over the last year, the distribution of UST has led to the development of one of the strongest developer ecosystems in crypto,” Kwon said. “The terra ecosystem and its community are worth preserving.
The problem with algorithmic stablecoins is that they fail. They fail because they rely on things they can’t control: investor demand; people who will perform the stabilizing arbitrage; and reliable price information. In the specific case of Terra, it seems likely that an unusually large withdrawal knocked the system out of balance.
The collective market value of all stablecoins has grown to $180 billion as of March this year, according to the Federal Reserve. But don't let the name fool you: Not all stablecoins are stable, per se. Some stablecoins have a 1-to-1 connection to real assets, like US Treasury bills. Some are linked to bonds, which can fluctuate in value.
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