A recovery in the price of Terra’s infamous stablecoin USTC does not always suggest that it will regain its lost peg to the dollar in the future.
Terra’s $40 billion effort to build a workable “algorithmic stablecoin” project has failed dismally since the project’s collapse in May. The experiment’s failure has been a major setback for Terra.
In spite of this, its native stablecoin TerraClassicUSD (USTC), which was once known as TerraUSD (UST), has been growing over the course of the previous week.
The Walking Dead In Stable Coin Form:
To review, the United States Treasury Note (UST) lost its peg to the U.S. dollar in May as a result of widespread withdrawals from the Anchor Protocol. Anchor Protocol was a lending and borrowing platform that offered clients a yield of up to 20 percent on their UST deposits.
The token had essentially no value as of the 15th of June when it was trading on the Kraken cryptocurrency platform at $0.005.
But after that, USTC began to rebound, and on June 29, its value per token was so close to reaching $0.10 that it almost broke through.
According to data provided by CoinMarketCap, during the same time period, its market value increased from $65 million to $767 million. This growth occurred simultaneously.
Despite the fact that USTC has been running as an abandoned token since May when Terra completed a “hard fork” and introduced a new blockchain alongside a new native asset called LUNA 2.0, this is still the case.
Interestingly, LUNA 2.0’s older version, called LUNA, which now operates under the name “Terra Classic (LUNC),” has also witnessed a spike in its market valuation similar to that of USTC, surging from approximately $160 million to $767 million in June.
This is in contrast to the market valuation of USTC, which remained relatively stable throughout the month.
Massive Focused Terra Pump:
According to CoinMarketCap, more than 45 percent of the trade volume that led to the unexpected price increase of USTC and LUNC came from KuCoin, which is a controlled exchange platform that apparently operates out of the Seychelles.
NEO Global Capital, a venture capital firm based in Singapore that is also involved with other financial platforms such as Babel Finance and CoinFLEX, is the primary supporter of KuCoin.
Because of the continuing drop in the value of the cryptocurrency market, both platforms have been experiencing liquidity issues.
InvestmentU, a financial analytics organisation, issued a report on June 28 in which it cautioned that “this isn’t a boom, bust, and boom again cycle.” The paper also stated that LUNC could experience a significant collapse since “the tech behind it is dead.”
The outlook does not appear to change for USTC, which has failed to carry out the primary duty that was assigned to it, which was to offer customers a reliable digital representation of the United States dollar.