The TerraUSD, or UST, stablecoin broke a $1 peg and fell to under $0.30. UST is an algorithmic stablecoin that maintains its value by increasing and decreasing the supply of another coin, Terra Luna. The Terra Luna quickly dropped from over $100 to fractions of a penny as its value collapsed with a supply increase from 340M to 6.5T. The Terra anchor protocol paid 20% APY on UST, and drove demand for the UST. Ultimately the peg couldn’t be maintained as UST size grew.
Link: WSJ
