Binance, the world’s largest crypto exchange, announced on the night of May 12-13 that it will stop offering UST and LUNA, two cryptocurrencies on the Terra blockchain. That’s the end of the project.
Death was pronounced that night on Binance Twitter account : the world’s largest exchange has removed UST and LUNA, and two cryptocurrencies from the Terra blockchain. ” Binance will withdraw and stop trading operations from 12:50am UTC (ie 2:50am in Paris on a Friday night) “, the platform announced.
Therefore, all exchanges between UST and the most important cryptocurrencies, whether with LUNA, Bitcoin, Ethereum (ETH), Binance Coin (BNB) or even stablecoin Tether (USDT), have been suspended. ).
This withdrawal of cryptocurrencies from the market is not really a surprise: it has been a few days since Binance warned that it would take action if LUNA falls below $0.005. The threat was carried out: overnight, the cryptocurrency fell to $0.00003856.
End of Terra
However, everything was fine for Terra until a few days ago. LUNA was still trading at $80 in early May, according to data from CoinMarketCap, and UST, a stablecoin in the Terra ecosystem, was still pegged to the dollar. But the UST panic selling phenomenon started around May 9 and turned the entire Terra blockchain upside down. The stablecoin fell to the dollar, its value falling to $0.68. In order to get it back on its feet, the founders of the Terra project decided to sacrifice the MOON, a mint (create) a lot of new units of cryptocurrency.
Not only was that not enough – UST is currently trading at $0.16 – but LUNA also fell from $80 on May 1 to $0.00003856 May 13. Carnage and a very painful time to live for cryptocurrency investors and owners.
Does the platform’s withdrawal mark the end of the Terra ecosystem? The news is not happy so far.
A few hours before Binance’s withdrawal announcement, the Terra Builder Alliance, a group of leading developers in the ecosystem, released a governance proposal about the future of the project called “moving forward.” And their conclusion is formal: it seems that the UST indexing mechanism will not work in the short term “, and so, ” it will be difficult to restore confidence in UST as a stablecoin “. However, they remain convinced that Terra’s rich ecosystem is worth saving “.
For this, The Terra Builder Alliance proposes a radical solution: reboot Terra to ” honor the owners of UST, LUNA and developers “. The new Terra project would produce “ new MOON which would be redistributed between developers and owners. The goal is to liquidate all remaining USTs and replace them with LUNAs in the new network, Terra Builder Alliance explains. When the operation is complete, UST will cease to exist in its current form and will be relaunched, with collaterals “.
In particular, this marks the end of UST as an algorithmic stablecoin: until then the crypto was based on an exchange mechanism with LUNAs to balance its price. According to what the Terra developers seem to be proposing, the new UST would no longer have this algorithmic function, but instead would use the method traditionally used by “classic” stablecoins, with collateral assets guaranteeing the funds.
The proposal, published on May 12, has received many comments, and is far from unanimous. Moreover, so far it is still extremely vague: no concrete methods of action have been specified, no date has been specified. It is especially not certain that it will be adopted. But for such an influential group within the project, the thought of removing the UST in its current form definitely does not bode well.
And, even without an algorithm, can investor confidence be restored? Does the Terra ecosystem really have a future? For now, it seems that the current version of LUNA and UST is destined to die. But will he be able to start from scratch in a while? Nothing seems certain.