TerraUSD (UST) climbed to a high of US$0.84 on Thursday after Terra proposed a network upgrade to increase the blockchain’s native token LUNA, in hopes to save its algorithmic stablecoin’s peg to the greenback.
See related article: Run on UST cuts the ground from under Terra’s feet
- The UST is minted by locking LUNA, meaning Terra intends to concede LUNA’s value to steady the UST rollercoaster.
- In a series of tweets, Terraform Labs founder Do Kwon said the increased LUNA supply will be sold on the open market in order to raise funds and rescue the UST peg.
- However, LUNA had dropped to almost US$3 by the time Kwon announced the recovery measure, and is trading at US$0.75 at press time, according to CoinGecko data.
- Kwon added Terra is also seeking external capital sources.
- The UST fiasco has led to market-wide concerns in regard to the feasibility of algorithmic stablecoins in tumultuous market conditions.
- UST was trading at US$0.72 at press time.
See related article: Terra’s UST fiasco cited by Yellen, who warns about stablecoins