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TerraUSD Crypto PNG Transparent Images

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Submitted by on Sep 3, 2021

TerraUSD (UST) is a Terra blockchain-based stablecoin. The printing of UST began in September 2020, following the successful launch and growing popularity of Terra. Technically, UST is not collateralized. Rather, the burning of the LUNA coin allows for the production of UST.

The asset’s demand and supply define UST’s value, and it varies accordingly. Holders of the LUNA coin can trade their LUNA for UST when the price of UST goes over a dollar. Furthermore, LUNA may be traded for the same amount of UST in dollars, presenting an attractive arbitrage opportunity. As the market cap decreases, fresh UST coins are produced until the UST coin meets its one-dollar price peg.

Furthermore, when UST supply grows, the price of LUNA tends to rise. This is because UST that has fallen below the one-dollar price peg may be traded for LUNA to earn a profit when supply contracts. As a result, the price of UST has returned to its objective of one dollar. When this happens, a certain quantity of LUNA is used, making it more rare and precious. The last of the LUNA is collected in the communal pool.

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As TerraUSD (UST) becomes simpler to spend as a result of its enhanced usefulness, the price of UST may continue above a dollar. One of the main reasons LUNA and UST are being considered alternative investment vehicles is the expected risk.

TerraUSD’s circulating supply has doubled in recent months, making it the 17th largest stablecoin by market size at the time of writing. This demonstrates strong demand for the Terra LUNA currency and speaks well for the project’s future.

Due to a supply-demand imbalance in its monetary policy, Dai is the most frequently used decentralised stablecoin on Ethereum, although it has serious scalability difficulties.

Users that want to acquire leveraged exposure to ETH and ERC-20 assets provide Dai.

Users that want to access a USD-denominated on-chain store of value want Dai.

When the need for stability outstrips the demand for asset leveraging on Ethereum, this mismatch causes problems.

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