Terra’s two main tokens went into free fall Wednesday as TerraUSD or UST, which is meant to maintain a 1-to-1 peg with the US dollar, plunged as low as 26 cents.
UST was trading 4.63 percent lower at $0.6175 as of 2.36 am ET, CoinMarketCap data showed. On the other hand, sister token Terra LUNA plunged 96.61 percent to $0.2869. LUNA has lost 99.67 percent of its value in the past seven days.
Stablecoins are digital tokens pegged to the value of traditional assets, such as the US dollar. They are tagged as safe havens in times of turmoil in crypto markets and are a common medium of exchange, often used by traders to move funds around and speculate on other cryptocurrencies.
Blue-chip tokens Bitcoin and Ether also saw a downward rush as the stablecoins economy continued to deteriorate. Bitcoin was last down 12.74 percent to $27,335. Ether fell 20.93 percent to $1868.
UST is an “algorithmic” stablecoin that uses a complex system of minting and burning tokens to adjust supply and stabilize prices. UST’s price has crashed under the pressure of a sell-off in cryptocurrencies recently, resulting in further panic in the market.
Do Kwon, the coin’s creator, took to Twitter and said, “I understand the last 72 hours have been extremely tough on all of you – know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this.”
Algorithmic stablecoins are still a relatively new phenomenon but notably, UST has grown to become a major player in the crypto economy, with a circulating supply of 16 billion tokens.