Terra Luna, one of the most popular coins of the last period, started to lose value rapidly after the 9th of May. Sales have accelerated in the previous 24 hours. Luna's value has decreased by 87% daily at the time of writing this article.
Terra is a blockchain that specializes in generating algorithmic stable coins. The value of UST, the leading stable coin of the Terra ecosystem, was backed by the ecosystem's leading coin, Luna. There have even been recent purchases of Bitcoin and Avax to support the value of UST. Paying 19% annual interest to UST over the Anchor protocol was one of the factors that made UST popular with investors. Luna's value increased as UST was in demand. However, the panic in the market in recent days caused the value of the UST to fall below 1 dollar peg. This situation paved the way for the formation of a death spiral. Currently, the value of UST has dropped to as low as 54 cents. Even though I didn't have any investment in the Terra ecosystem, I followed their achievements with sympathy. Luna's total market capitalization has dropped to approximately one-third of UST's total market value. I hope they will find a solution to the problem.
Photo by Markus Spiske on Unsplash
The problem that occurred in the Terra ecosystem affected the entire crypto market. The main coins that received their share of the said effect were BTC, Avax, Cosmos, Osmosis, and Thorchain. BTC and Avax were coins held as collateral to protect the value of Luna. On the other hand, I guess that Osmosis and Thorchain are negatively affected by the fact that they have Luna and UST in their liquidity pools. (Due to impermanent loss effect)
On the other hand, Maker DAO, which is Terra's rival, emerged from this process stronger. Because DAI, the algorithmic coin of the Maker ecosystem, was able to maintain its value of 1 dollar.
The stable coin of the Hive ecosystem, the Hive Dollar (HBD), was also one of the coins that performed well in the recent financial turmoil. In the last week, HBD has dropped to a minimum of 90 cents and is still trading at 97 cents. pHBD, the Polygon version of HBD, is still at 99.5 cents. I bought HBD at the height of the financial turmoil on Monday. By the way, I have to note that HBD, one of the oldest algorithmic stable coins on the market, has been tested many times in various market conditions.
It is also good news for Hive community members that Terra or UST are not traded in the Hive ecosystem's DEFI apps, Beeswap, Cubdefi, and PolyCub. Regardless of these applications, there may be those who have invested in the Terra ecosystem. I hope they have implemented measures to limit their loss.
Hive price, on the other hand, has decreased considerably in line with the general trend in the market. However, Hive is not among the coins specifically affected by the Terra event.
My spider senses say the sentiment has changed and bulls are getting stronger in the market, I hope I'm not wrong.
Thank you for reading.
Posted Using LeoFinance Beta
