Binance, the world’s largest crypto exchange, announced on the night of May 12-13 to stop offering UST and LUNA, the two cryptocurrencies on the Terra blockchain. It’s the end of the project.
Death was pronounced that night on the Binance Twitter account : the world’s largest exchange has removed UST and LUNA, and the two cryptocurrencies from the Terra blockchain. ” Binance will withdraw and stop trading operations from 12:50 am UTC (i.e. 2:50 am in Paris on Friday night) “, announced the platform.
All exchanges between UST and the most important crypto-currencies are therefore suspended, whether with LUNA, Bitcoin, Ethereum (ETH), Binance Coin (BNB) or even with the stablecoin Tether (USDT). ).
This withdrawal of cryptos from the market is not really a surprise: it had been several days since Binance had warned that it would take action if the LUNA fell below $0.005. The threat was carried out: overnight, the crypto had fallen to $0.00003856.
The end of Terra
Still, everything was fine for Terra until a few days ago. LUNA was still trading for $80 in early May, according to data from CoinMarketCap, and UST, the stablecoin in the Terra ecosystem, was still pegged to the dollar. But a UST panic selling phenomenon started around May 9, and turned the entire Terra blockchain upside down. The stablecoin fell off the dollar, and saw its value drop to $0.68. To put it back on its feet, the founders of the Terra project decided to sacrifice the LUNA, and mint (create) very many new units of the crypto-currency.
Not only was that not enough — a UST currently sells for $0.16 — but the LUNA also crashed from $80 on May 1 to$0.00003856 on May 13. A carnage and a very painful time to live for investors and owners of crypto.
Does the withdrawal of the platform mark the end of the Terra ecosystem? So far, the news is not happy.
A few hours before Binance’s withdrawal announcement, the Terra Builder Alliance, a group of leading developers in the ecosystem, published a governance proposal on the future of the project, titled “moving forward”. And their conclusion is formal: it seems that the UST indexation mechanism will not work in the short term “, and so, ” it will be difficult to restore confidence in the UST as a stablecoin “. Nevertheless, they remain convinced that Terra’s rich ecosystem is worth saving “.
New LUNAs?
For this, theTerra Builder Alliance proposes a radical solution: relaunch Terra, to ” honor owners of UST, LUNA, and developers “. The new Terra project would produce a “ new LUNA which would be redistributed between developers and owners. The goal is to liquidate all remaining USTs, and exchange them with LUNAs in a new network, explains the Terra Builder Alliance. Once the operation is completed, the UST will cease to exist in its current form and will be relaunched, with collaterals “.
Concretely, this marks the end of the UST as an algorithmic stablecoin: the crypto was based until then on an exchange mechanism with LUNA to balance its price. According to what the developers of Terra seem to propose, the new UST would no longer have this algorithmic function, but would use the method traditionally employed by “classic” stablecoins, with collateral assets to guarantee the funds.
The proposal, published on May 12, has received a lot of comments, and it is far from unanimous. Moreover, it still remains extremely vague for the moment: no concrete means of action have been detailed, no date has been given. It is especially not sure that it will be adopted. But for such an influential group within the project to think of getting rid of the UST in its current form definitely does not bode well.
And, even without an algorithm, can investor confidence return? Does the Terra ecosystem really have a future? For now, the current version of LUNA and UST seems destined to die. But will they be able to start from scratch in a while? Nothing seems certain.