Double bubble? Terra's defunct 'unstablecoin' suddenly climbs 800% in one week
Terra's $40-billion experiment to create a functional "algorithmic stablecoin" project has failed drastically following its collapse in May.
Nonetheless, its native stablecoin TerraClassicUSD (USTC), earlier called TerraUSD (UST), has been thriving in the past week.
Dead stablecoin walking
To recap, UST lost its U.S. dollar peg in May following mass withdrawals from Anchor Protocol, a lending and borrowing platform offering up to 20% yield to clients on their UST deposits. As of June 15, the token was almost worthless, trading at $0.005 at the Kraken crypto exchange.
But USTC started recovering afterward, insomuch that its value per token almost reached $0.10 on June 29. Simultaneously, its capitalization surged from $65 million to $767 million in the same period, according to data from CoinMarketCap.
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 like USTC, surging from around $160 million to $767 million in June.
Massive concentrated Terra pump
According to CoinMarketCap, more than 45% of trading volume behind USTC and LUNC's surprising price boom has originated from KuCoin, a centralized exchange platform reportedly operating from Seychelles.
KuCoin's lead backer is NEO Global Capital, a Singapore-based venture capital firm also exposed to financial platforms like Babel Finance and CoinFLEX. Both platforms have been facing liquidity troubles due to the ongoing crypto market decline.
"This isn't a boom, bust and boom again cycle," warned InvestmentU, a financial analytics group in its June 28 note, saying that LUNC could decline massively because "the tech behind it is dead."
"Its (LUNC) raison d'etre has been vanquished. And so has its price. While we can appreciate investors' natural desires for outsized gains, there are better ways to go about it than this."
The outlook appears the same for USTC, which has failed to perform its main function, i.e. providing clients a digital, stable version of the U.S. dollar.
This is a game for whales Dump Next Time ☝️ all newcomers Lose Money— Crypto Bull (@_Crypto_Bull) June 29, 2022
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