Terra Ecosystem has been diving into the ocean of losses for some time. Today, UST the native stablecoin of Terra has dived below $0.5, and the value is constantly crashing. The selling of $1.5 billion worth of BTC by Luna Foundation Guard to protect UST went ineffective. Terra is on the stage of de-pegging the TerraUSD(UST) stablecoin with U.S. dollars, as a consequence of which LUNA is losing its value speedily.
However, Teraa founder Do Kwon has come up with a recovery plan. Do Kwon initiates the Terra Recovery plan by increasing the basepool from 50M to 100M and decreasing the pool recovery block from 36 to 18 to maximize minting capacity. To pass the judgment and proceed with the plan, the validators are required to vote on the decision.
According to Kwon’s plans, the existing Bitcoin reserves of Luna Foundation Guard (LFG) will get a boost of $3 billion. Further, a $10 billion fund will be created for LFG for long-term usage. Currently, Terra is working continuously to decrease UST supply so that a state of equilibrium can be achieved.
For a few weeks, the UST stablecoin is falling from its 1-to-1 peg to the US dollar and is trading at $3.69 according to CoinMarketCap reports at this press time. Certainly, a major loss has hit hard the entire crypto market and wiped out billions of dollars of value in a jiffy. Also, the debate is restored on the stability of algorithmic stablecoins in the market. Looking at the situation, Do Kwon tweeted yesterday that Terra is close to announcing a recovery plan for UST.
Also read: Binance halts Terra LUNA & UST withdrawals amidst network congestion
How does Terra’s Recovery plan work?
However, some market analyst and investors have their theories of conspiracy against Terra. It is considered that Citadel intentionally traded 25k BTC for UST and dumped it later after BTC lost its high value in the market. After this, the LFG was forced to sell off its 25k reserve BTC to support LUNA and UST in the decentralized exchange (DEX).
If LUNA sees a long time downfall, the investors holding LUNA might see a considerable time. The profits that have been minted till now by LUNA might be wiped out from the market.
Also read: Cardano’s Algorithmic Stablecoin ‘Djed’ to compete with Terra’s UST
