LUNA -- May 14, 2022

SeekingAlpha, May 12, 2022.

• The fact of the matter is Terra LUNA plummeted in devastating fashion. And because Terra LUNA acts as one of the currencies backing TerraUSD it too took a significant nosedive.
• What went wrong is people lost confidence in this system that had been working. A whole lot of investors dumped both Terra LUNA and TerraUSD.
• It’s going to take a long time for Terra to regain the trust of investors. And as of right now, there doesn’t seem to be anything in place to keep what happened to Terra LUNA and TerraUSD from happening again.

"Stablecoin," Investopedia: What Is a Stablecoin?

Stablecoins are cryptocurrencies the value of which is pegged, or tied, to that of another currency, commodity or financial instrument. Stablecoins aim to provide an alternative to the high volatility of the most popular cryptocurrencies including Bitcoin (BTC), which has made such investments less suitable for wide use in transactions.

• Stablecoins are cryptocurrencies that attempt to peg their market value to some external reference.
• Stablecoins are more useful than more volatile cryptocurrencies as a medium of exchange.
• Stablecoins may be pegged to a currency like the U.S. dollar or to the price of a commodity such as gold.
• Stablecoins pursue price stability by maintaining reserve assets as collateral or through algorithmic formulas that are supposed to control supply.