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SVTPerformance's Chain of Restaurants
Road Side Pub
BITCOIN
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<blockquote data-quote="Weather Man" data-source="post: 16771231" data-attributes="member: 137766"><p>When one ponzi backs another.</p><p></p><h3>As Terra UST stablecoin continues to plunge, backer says rescue plan in the works</h3><p>May 11, 2022 7:00 AM ET<a href="https://seekingalpha.com/symbol/UST-USD?source=content_type%3Areact%7Csection%3Amain_content%7Csection_asset%3Ameta%7Cfirst_level_url%3Anews%7Csymbol%3AUST-USD" target="_blank">TerraUSD (UST-USD)</a>, <a href="https://seekingalpha.com/symbol/LUNA-USD?source=content_type%3Areact%7Csection%3Amain_content%7Csection_asset%3Ameta%7Cfirst_level_url%3Anews%7Csymbol%3ALUNA-USD" target="_blank">LUNA-USD</a>By: <a href="https://seekingalpha.com/author/sa-editor-yoel-minkoff?source=content_type%3Areact%7Csection%3Amain_content%7Csection_asset%3Ameta%7Cbutton%3Aauthor_name%7Cfirst_level_url%3Anews" target="_blank">Yoel Minkoff</a>, SA News Editor<a href="https://seekingalpha.com/news/3836659-as-terra-ust-stablecoin-continues-to-plunge-backer-says-rescue-plan-in-the-works#comments" target="_blank">6 Comments</a></p><p></p><p></p><p>It's not easy to engineer a new currency, especially an algorithmic stablecoin. Terra (<a href="https://seekingalpha.com/symbol/UST-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews" target="_blank">UST-USD</a>), the world's third-largest stablecoin, <a href="https://seekingalpha.com/news/3835042-ust-stablecoin-loses-1-peg-to-us-dollar-luna-tokens-fall?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews" target="_blank">lost its peg</a> to the U.S. dollar on Monday, dropping to as low as 69 cents and causing a swathe of investors to liquidate their holdings. Things recovered somewhat on Tuesday, before it tumbled below 40 cents early Wednesday, causing widespread panic as the controversial stablecoin (which has a circulating supply of nearly 17B tokens) went into freefall.</p><p><em>Snapshot:</em> There are basically two types of stablecoins, which use distributed ledger technology to attach the value of tokens to something that already exists. One is backed by cash and assets to maintain their value, like Tether (<a href="https://seekingalpha.com/symbol/USDT-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews" target="_blank">USDT-USD</a>) and USD Coin (<a href="https://seekingalpha.com/symbol/USDC-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews" target="_blank">USDC-USD</a>), while others do not have any collateral behind them like algorithmic stablecoins. Instead, the pegs on which these coins are built are supposed to be maintained through an arbitrage relationship with another cryptocurrency (in the case of Terra, it relies on a sister token named Luna (<a href="https://seekingalpha.com/symbol/LUNA-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews" target="_blank">LUNA-USD</a>)).</p><p>The problem is that it hasn't been working (at least for the past few days). The relationship solely depends on the belief that there is a particular floor to the currencies, hoping that one can always exchange (or print) Luna (<a href="https://seekingalpha.com/symbol/LUNA-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews" target="_blank">LUNA-USD</a>) to guarantee the $1 peg for Terra (<a href="https://seekingalpha.com/symbol/UST-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews" target="_blank">UST-USD</a>). Aware of this dynamic, Do Kwon, the founder of Terraform Labs (which powers the Terra blockchain) has been diversifying into Bitcoin (<a href="https://seekingalpha.com/symbol/BTC-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews" target="_blank">BTC-USD</a>) reserves for currency support - in case confidence eroded in Luna (<a href="https://seekingalpha.com/symbol/LUNA-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews" target="_blank">LUNA-USD</a>) and Terra (<a href="https://seekingalpha.com/symbol/UST-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews" target="_blank">UST-USD</a>) - but that could also be dangerous if Bitcoin becomes devalued as it has over the past six months. "Close to announcing a recovery plan for $UST. Hang tight," tweeted Kwon in response to the crisis.</p></blockquote><p></p>
[QUOTE="Weather Man, post: 16771231, member: 137766"] When one ponzi backs another. [HEADING=2]As Terra UST stablecoin continues to plunge, backer says rescue plan in the works[/HEADING] May 11, 2022 7:00 AM ET[URL='https://seekingalpha.com/symbol/UST-USD?source=content_type%3Areact%7Csection%3Amain_content%7Csection_asset%3Ameta%7Cfirst_level_url%3Anews%7Csymbol%3AUST-USD']TerraUSD (UST-USD)[/URL], [URL='https://seekingalpha.com/symbol/LUNA-USD?source=content_type%3Areact%7Csection%3Amain_content%7Csection_asset%3Ameta%7Cfirst_level_url%3Anews%7Csymbol%3ALUNA-USD']LUNA-USD[/URL]By: [URL='https://seekingalpha.com/author/sa-editor-yoel-minkoff?source=content_type%3Areact%7Csection%3Amain_content%7Csection_asset%3Ameta%7Cbutton%3Aauthor_name%7Cfirst_level_url%3Anews']Yoel Minkoff[/URL], SA News Editor[URL='https://seekingalpha.com/news/3836659-as-terra-ust-stablecoin-continues-to-plunge-backer-says-rescue-plan-in-the-works#comments']6 Comments[/URL] It's not easy to engineer a new currency, especially an algorithmic stablecoin. Terra ([URL='https://seekingalpha.com/symbol/UST-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews']UST-USD[/URL]), the world's third-largest stablecoin, [URL='https://seekingalpha.com/news/3835042-ust-stablecoin-loses-1-peg-to-us-dollar-luna-tokens-fall?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews']lost its peg[/URL] to the U.S. dollar on Monday, dropping to as low as 69 cents and causing a swathe of investors to liquidate their holdings. Things recovered somewhat on Tuesday, before it tumbled below 40 cents early Wednesday, causing widespread panic as the controversial stablecoin (which has a circulating supply of nearly 17B tokens) went into freefall. [I]Snapshot:[/I] There are basically two types of stablecoins, which use distributed ledger technology to attach the value of tokens to something that already exists. One is backed by cash and assets to maintain their value, like Tether ([URL='https://seekingalpha.com/symbol/USDT-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews']USDT-USD[/URL]) and USD Coin ([URL='https://seekingalpha.com/symbol/USDC-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews']USDC-USD[/URL]), while others do not have any collateral behind them like algorithmic stablecoins. Instead, the pegs on which these coins are built are supposed to be maintained through an arbitrage relationship with another cryptocurrency (in the case of Terra, it relies on a sister token named Luna ([URL='https://seekingalpha.com/symbol/LUNA-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews']LUNA-USD[/URL])). The problem is that it hasn't been working (at least for the past few days). The relationship solely depends on the belief that there is a particular floor to the currencies, hoping that one can always exchange (or print) Luna ([URL='https://seekingalpha.com/symbol/LUNA-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews']LUNA-USD[/URL]) to guarantee the $1 peg for Terra ([URL='https://seekingalpha.com/symbol/UST-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews']UST-USD[/URL]). Aware of this dynamic, Do Kwon, the founder of Terraform Labs (which powers the Terra blockchain) has been diversifying into Bitcoin ([URL='https://seekingalpha.com/symbol/BTC-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews']BTC-USD[/URL]) reserves for currency support - in case confidence eroded in Luna ([URL='https://seekingalpha.com/symbol/LUNA-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews']LUNA-USD[/URL]) and Terra ([URL='https://seekingalpha.com/symbol/UST-USD?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews']UST-USD[/URL]) - but that could also be dangerous if Bitcoin becomes devalued as it has over the past six months. "Close to announcing a recovery plan for $UST. Hang tight," tweeted Kwon in response to the crisis. [/QUOTE]
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