CryptoCompare Research - Exploring Stablecoins: Terra & UST's Fall From Grace

The recent blowup in the Terra ecosystem has been one of the most impactful events in the history of crypto - comparable with the collapse of Mt. Gox in 2014, and the sharp market crash in January 2018 and in March 2020.

CryptoCompare's latest research piece details the events of the last few days, the repercussions, the aftermath, and what's next for the space.

Download the full report here.

Since May 8th:

UST’s peg has fallen to a low of $0.078. At the time of writing it is trading at $0.11.

LUNA’s market capitalization has fallen from $41.2bn to $6.6mn, the largest destruction of wealth in this amount of time in a single project in crypto’s history.

Over 6 trillion new LUNA tokens have been minted, which has diluted its price down to $0.00000953.

LUNA supply is currently 16,928x what it was 48 hours ago.

Download Report

UST's peg has fallen to an all-time low of 0.078
Terra's decline began on May 8th following a slight depeg of Terra’s flagship UST stablecoin to 0.9888. Things went from bad to worse when on May 10th, the stablecoin fell to a low of 0.755 (based on CryptoCompare's CCCAGG pricing). At the time of writing, UST has fallen as low at $0.078.

LUNA supply is currently 16,928x what it was 48 hours ago
Since May 8th, there have been over 6 trillion new LUNA tokens minted, which has diluted its price down to $0.00000953. As a result, LUNA's market capitalization has fallen from $41.2bn to $6.6nm.

Collateralized stablecoins like USDT should not suffer a similar crash to TerraUSD
Contrary to TerraUSD, USDT is a collateralized stablecoin, and is thus fully backed by reserves including cash and cash equivalents like commercial paper. Therefore, we do not believe there is a risk of a permanent depeg of the stablecoin (USDT), but rather, fear in the markets has had contagion effects on the entire sector.

The information provided by this report does not constitute any form of advice or recommendation by CryptoCompare. Any redistribution of charts appearing in this Review must cite CryptoCompare as the sole provider and creator.