It’s been over a week since Terra UST de-pegged, triggering a massive market drawdown.
UST’s market cap plummeted from $18.7 billion to $1.15 billion at writing. Similarly, the Terra LUNA token dropped from $21 billion to $236 million at its lowest point on May 13. The event was a wake-up call for investors who were blindsided by the severity of the losses, the repercussions of which will be felt years from now.
Previously, the UK had expressed interest in recognizing stablecoins, even proposing greater legacy integration. But now, the mere mention of them is enough to make anyone nervous. Has anything changed?
How Terra UST maintains price stability
The first sign of trouble came on May 9 as UST broke its 1:1 peg with the dollar. Unlike other stablecoins such as Tether, UST maintains its peg through an algorithmic process that moderates supply and demand in conjunction with the LUNA token.
If UST demand is high and the supply is low, the UST price increases. Likewise, the UST pric
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