05-12-2022 icon

Terra set to burn $1.4B UST as plans to quench the burning market continues

By Lucy Adegbe
Terraform

The recent de-pegging of TerraUSD (UST) from the dollar raised eyebrows among investors in the crypto community, with many questioning the stability of algorithmic stablecoins.

The price UST fell to 22 cents up from $1.00 amid massive sell-offs. Similarly, Terra’s native token LUNA lost up to 99% of its value, falling from $82 to $0.02.

However, recent tweets by the Terra Money Twitter account have outlined plans that its CEO, Do Kwon is taking to rescue the stablecoin.

The tweets highlight Proposal 1164, a proposal that seeks to balance UST by expanding its base pool. So far, the proposal has received over 220,000 votes at over 50%.

As a result of the UST supply overhang that contributed to LUNA’s price depreciation, the company has resolved to burn more UST and stake some LUNA tokens

β€œThe primary obstacle is expelling the bad debt from UST circulation at a clip fast enough for the system to restore the health of on-chain spreads,” the tweet read in part.

Three emergency measures have been taken. And one such include the burning of around $1.4 billion UST which represents 11% of the outstanding UST liabilities.

The organization also plans to stake 240 million LUNA in hopes that it will strengthen the network governance of the TERRA ecosystem.