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Whats wrong with UST and how does it cause turmoil in crypto?

cryptocurrencies such as Bitcoin, Ethereum, and many others, fell wildly, and their worth decreased to bloody red about two months. The decrease was high these things are normal in the crypto market .but the unusual part is  UST stability which is considered to be valued at one U.S. dollar, out of the blue now if it was a simple project it wasn’t important but the market including UST, or TerraUSD, is about $16.7 billion and it is considered as one of the stablecoin in crypto.

Think of the U.S. dollar with decreased value, which is known as inflation but think of the USD losing purchasing power per hour or minutes. The bagel changes the cost from $3 this morning to $4 in the afternoon, and the amount of your investment in your bank account doesn’t raise. These waves would create chaos in the economy of the world, as the prices of transportation increase and make other things inflation even more, at last, it causes hardship or impossibility for many to provide their essential things.

Regarding the cryptocurrencies area, these things aren’t normal because the whole countries’ economies arent on a pick. But those who considered UST valued at $1, and borrowed UST on a decentralized time, are in trouble. But these prices also affect the price of other cryptocurrencies, such as Bitcoin.

When someone owns a playground in which earning money is possible with few limitations, and you make them familiar with UST to it then they try to take advantage of it. 

In good conditions, you can get great amounts of UST to depeg it, and after that, the panic, short LUNA and may be purchased huge amounts of UST in advance.

It’s clear when cryptocurrencies are risky on the other hand the crypto market is young, and decentralized platforms such as Ethereum creates possibilities for providing different financial products.

There is a basic version. a company called Terraform Labs made and supports UST which also SUPPORTS the Terra blockchain. “sister” cryptocurrency called LUNA as its sister to which it is related, as you have to burn LUNA to create UST and vice versa, and you can always orally exchange 1 UST for $1 worth of LUNA. The system is created with the basics of supply and demand; request for UST drop and its, arbitrageurs might sell LUNA for UST until the balance is in to run.

About Nicolle

She is an Indian Freelance writer. She loves thinking, learning, and writing about all things Web3.

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