'What Happened to Terra Luna?' cc: tatum_io blockchain terraluna
was built with the intention of offering users the stability of fiat currencies while harnessing the power of blockchain technology for settlements that were faster and cheaper than the regular payment solutions. The Terra Luna token was widely accepted because it was backed by its algorithmic stablecoin sister token which is known as the Terra Classic USD $UST.
The profits from the variation in prices of the Terra Luna Classic token and its sister token the Terra Classic USD goes to the arbitrageurs on the Terra network. Apart from helping the maintain $UST peg to the US dollar,of being the payment method used for transaction fees in the Terra network's gas system. This makes $LUNA a utility token on the Terra ecosystem. In addition, the Terra Luna Classic token can be staked for a profit.
, there were indications that the token could go as low as $1.20 if it printed a sustained four-hour candlestick close below the $3.30 level. This analysis was based on a Fibonacci retracement indicator. The analysis turned out to be close to the truth: as at the 22nd of July 2022, the Terra Luna isat $1.93 per token on CoinMarketCap. This is a significant loss for a token that once sold for almost $20 and the reason why the Terra 2.0 crashed is clear.
There are some speculations that Terra Luna and the Terra Classic USD model are not sustainable. The Terra Classic USD $UST is anthat depends on $LUNA to maintain its peg to the US dollar. In theory, $1 of $LUNA is supposed to be exchanged for $1 worth of UST. However, when market volatility forces are in place for algorithmic stablecoins, crashes are bound to happen.
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