In the last few days, two criptomonedas: UST and Moon, have jumped to the main economic news due to the dramatic loss that they have experienced in their value and the impact they have had in the market criptodivisas.
Some experts have described the crash as “the week craziest in the history of the criptomonedas,” and many others have already documented the losses they have caused to the investors, who are even afraid of losing their property or their life savings.
But, what are UST and Moon? Both are known as “stablecoins,” which translated into Spanish means stable currencies, and were developed by Terraform Labs, a company in south korea founded by technology entrepreneur Do Kwon, according summarizes the Spanish newspaper El Economista.
The first, known as UST Terra (or Terra), is a digital currency created to have a parity with the u.s. dollar, which means that each coin UST is equivalent to $1.00.
The purpose of a stable currency is that it provides the stability with respect to a physical currency, like the dollar or the euro, and does not contain the characteristic volatility of other criptomonedas as the Bitcoin.
Many investors have lost millions sums of money after investing in criptomonedas as Terra and Luna.
For his part, Moon is a stablecoin known as token of governance, whose holders will have the chance to review and participate in the decisions that have to do with the protocol in the works that criptoactivo, something like the blockchain where it operates. This token came to be worth up to almost $120 in April.
According to a Chronicler, the debacle of these virtual currencies occurred due to the nature of its operation, mathematical, because its creators had defined a protocol that allowed to safeguard the value of the other in a kind of mechanism of buying and selling that maintaining stable prices.
That is to say, that if there was a threat of a fall in the price of UST, the protocol bought tokens of the Moon to increase the value of UST and vice versa; however, the last week, there was a large withdrawal of funds UST, so the protocol was activated and due to the heavy volume of transactions led to the fall in the price of a Moon.
Once the prices of both currencies fell, the incentives to retrieve the prices ceased to exist within that protocol, which led UST lost its parity with the dollar, and came to be worth just about $0.13, while Moon lost almost 100% of its value, putting in a price of a fraction of a penny.
Therefore, Terraform recently announced the sale of up to 80,000 bitcoins that had in its reserves, equivalent to about $2,700 million, which would serve to re-purchase the UST declining to the holders and to refund the price and the parity with the dollar. However, experts consulted by media such as The Independent believe that the project is already finished.
