Terraluna cryptocurrency

Stablecoins are used by crypto traders as safe havens for when markets in DeFi (decentralized finance) get choppy: instead of converting their more volatile ...

He then used his position of power to defend his coin in the same way that the Federal Reserve might, in turn crushing the entire market. Much of the promise of crypto lies in its decentralized nature: that its value doesn’t derive from manipulable controlling authority like a bank or a government, but rather sleekly-designed code and network effects. We see this as a computing paradigm shift that is bigger than the ebb and flow of the short term price of Bitcoin. We are doubling down, specifically in infrastructure, DeFi and emerging use cases,” they wrote. “Some of the [firms] made a lot of money off this, and I think they should compensate those who have lost.” Over the last week, many leaders in the crypto community have scrambled to distance UST from other types of stablecoins, arguing that reserve-backed stablecoins are comparatively secure and should be allowed to continue to flourish with minimal regulation. “And those have had runs and have been bailed out.” (The economics journalist Jacob Goldstein made the same comparison in TIME’s Future of Money issue in October.) The rest of the crypto ecosystem needs to be open to working with regulators such that we can deter these types of situations from happening in the future,” MacPherson says. Many worry that Terra’s crash is the first domino precipitating a long-foretold “crypto winter,” in which mainstream investors lose interest and values remain low for months.“ I suspect some cryptocurrencies will be worthless and that capital investment in the space will slow to a crawl as investors nurse their losses, much as we saw in the Internet bubble,” Bloomberg’s Edward Harrison wrote. Their activity caused the linked currency Luna to also crash in what is known as a “death spiral.” As of now, UST is worth 12 cents, and Luna is worth fractions of a penny after being worth as much as $116 in April. The life savings of many Terra and Luna investors vanished in a matter of days. They present the same kinds of risks that we have known for centuries in connection with bank runs.” The crash bankrupted many investors and pulled down the entire crypto market with it: over $400 billion in value was wiped out in terms of crypto market capitalization.