Terra’s stablecoin has lost its dollar peg and is currently trading around five cents.
Frank Chaparro, editor at The Block, called the UST crisis the most financially destructive event in the history of the cryptocurrency market.
He made the remark during a recent interview with CNBC. When asked about UST’s recent de-pegging, Chaparro said:
“We have indeed seen a significant de-pegging in terms of tether, but I’ve spoken with the team and it seems they are managing. I’ve heard there is pressure to exit stablecoins now because of the risk illustrated by UST, which really cannot be understated. This is likely the most financially destructive event in crypto history, with perhaps $50 billion lost.”
He added that cryptocurrency investors are also worried about other stablecoins. Chaparro told CNBC:
“It’s not surprising that investors are concerned about Tether and other stablecoins right now. But regarding the broader stablecoin market, I spoke with people at Tether and they said they effectively have enough short-term resources, so it would be fairly easy for them to honor redemptions worth a few billion dollars.”
Chaparro said UST is in a very different position. The project is scrambling to bring various whales into the market to inject at least $1 billion in capital. He said:
“But at the moment, with UST trading so low and Luna—the native token of Terra—looking bleak, that doesn’t mean it couldn’t happen; it’s just a question of when it might occur.”
LUNA, the native token of the Terra ecosystem, has lost more than 98% of its value in recent days and is currently trading at $0.06087 per coin.