Why Shouldn’t We Worry About the Crypto Crash? Analyzing What Went Wrong
The news headlines are in an uproar. Bitcoin is falling like a stone, dragging all other cryptocurrencies with it. This all started with the failure of UST, also known as TerraUSD, and its sister coin, Luna. Although we could go back and look at world events and say this came about because of the Russian-Ukrainian war. In any case, putting blame on events isn’t what we’re here for today. We’re here to look at the current state of the market and see why panic is an unhelpful feeling.
UST and the Crypto Crash
Most people in the world of blockchain currency will remember the day when UST lost its peg. UST is a stablecoin, and according to Coindesk, a stablecoin is a crypto coin whose value is tied to an asset external to the blockchain. This approach means that the currency needs to be “pegged” to an asset (in this case, the US Dollar). UST is known as an algorithmic stablecoin in that it uses an algorithm to automatically adjust the supply to meet demand and ensure that the coin remains pegged to 1 USD per UST.
So, how does it do this? Well, UST is tied to another coin called Luna. To…
