According to CoinGecko data, Luna fell to $0 on Friday, a shocking drop for a cryptocurrency that had formerly been worth more than $100.
The contentious stablecoin TerraUSD’s sister token is now practically worthless.
The failure of contentious stablecoin Terra triggered a crypto market crisis, wiping out billions of dollars in value in a single day.
The TerraUSD, or UST, is designed to be pegged to the US dollar one-to-one. According to CoinGecko data, UST has lost its peg and was trading at roughly 12 cents on Friday.
Luna is tied to UST. UST is an algorithmic stablecoin, which means its $1 peg is expected to be controlled by code.
That distinguishes it from other stablecoins like tether and USDC, which are backed by real-world assets like bonds. UST does not have any real-world reserves.
To guarantee price stability, the UST algorithm uses a complicated mechanism of minting and burning tokens.
However, UST has been put to the test by high market volatility, and it has been unable to maintain the peg.
The Terra blockchain, which underlies UST and luna, has stopped processing transactions twice in less than 24 hours, adding to the complexities.
Meanwhile, on Friday, Binance, the world’s largest cryptocurrency exchange, delisted UST and luna.
Aside from the UST saga, crypto markets have been buffeted by a slew of other headwinds, including increasing inflation and interest rate hikes, which have triggered a sell-off in global stock markets, which has filtered down to crypto markets.
Cryptocurrency prices have historically been linked to stock market movements.
Most cryptocurrencies have lost more than half of their value.
Read more on Tech Gist Africa:
The market value of crypto assets dropped by $800 billion in just one month
More than $1 trillion has been wiped off the valuation of the world’s largest technology companies