TerraUSD, the so-called stable cryptocurrency that unexpectedly broke parity with the dollar this week, will adjust its complex linking mechanism in a bid to stabilize the cryptocurrency, its co-founder said in a tweet last Wednesday.
Stable cryptocurrencies are digital tokens pegged to the value of traditional assets, such as the U.S. dollar. They are popular in times of turmoil in cryptocurrency markets and are a common medium of exchange, often used by traders to move funds and speculate on other cryptocurrencies.
TerraUSD, also known as UST, is one of the largest by market capitalization, but unlike most major stable cryptocurrencies that are backed by other assets, TerraUSD’s value is derived from complex algorithmic processes, linked to another paired token called Luna, which is free-floating.
According to its website “Terra is a public blockchain protocol deploying a suite of algorithmic decentralized stablecoins which underpin a thriving ecosystem that brings DeFi to the masses.”
TerraUSD broke its 1:1 relationship with the dollar this week, complicating cryptocurrency markets already pressured by falling stock markets, and continued its plunge on Wednesday, when it touched 30 cents on the dollar, according to pricing website Coingecko.
Do Kwon, co-founder of Terraform Labs, the company behind the token, announced a “recovery plan” in a series of tweets, saying the company would seek additional external funding and rebuild TerraUSD to be collateralized, meaning it would be backed by reserves rather than relying on an algorithm to maintain its 1:1 parity with the dollar.According to CoinMarketCap, at the moment of writing this article the price of TerraUSD is US$0,558859 with a 24-hour trading volume of US$7.470.381.014. It is currently ranked number 14 in CoinMarketCap’s ranking, with a live market cap of US$7.072.628.426. It has a circulating supply of 12.655.482.311 UST coins and the maximum supply is not available.