The Swiss-based crypto exchange, SwissBorg, has released a report on the risks surrounding Terra’s stablecoin, UST. The token is currently undergoing extreme volatility, trading at just $0.59 at writing. SwissBorg issued a risk warning to users on May 10 and paused withdrawals of UST on the same day, hours before Binance followed suit. The report was completed in April, and almost all of the risks they identified are currently playing out.
Risks of TerraUSD (UST)
Unlike other stablecoins such as USDT or USDC, backed by fiat collateral and other liquid assets, UST is an algorithmically baked token. CryptoSlate has obtained a report from SwissBorg’s DFi team on UST risks. The report explained, “at any time, users on Terra can burn $1 of LUNA to mint 1 UST, or burn 1 UST to redeem $1 worth of LUNA. Therefore, the fate of UST and LUNA are closely linked, and so are the risks involved.” Importantly. It highlighted four key areas of risk;
A death spiral of UST-TerraLuna
Anchor Proto
We współpracy z: https://cryptoslate.com/swissborg-report-explains-cause-of-the-death-spiral-of-ust/
