Changpeng Zhao, CEO of Binance, the world’s largest cryptocurrency exchange expressed his disappointment in the way Terraform Labs handled the recent LUNA and UST collapse.
Zhao said that the team behind the Terra network hardly responded to Binance’s request to help them restore the network.
“We requested their team to restore the network, burn the extra minted LUNA, and recover the UST peg,” he tweeted. “So far, we have not gotten any positive response or much response at all”
5. I am very disappointed with how this UST/LUNA incident was handled (or not handled) by the Terra team. We requested their team to restore the network, burn the extra minted LUNA, and recover the UST peg. So far, we have not gotten any positive response, or much response at all
Terra ecosystem is composed of a native token called LUNA and a native stablecoin called UST. UST is an algorithmic stablecoin governed by smart contracts, with LUNA acting as an arbitrage cushion to help UST maintain the dollar peg.
Users could swap $1 worth of LUNA for UST and vice versa. If the price of UST rises above the peg, people can swap $1 worth of LUNA for UST and sell the newly minted UST for a profit.
Since last week, however, the UST stablecoin depegged, hitting an all-time low of $0.15 today, according to data from CoinMarketCap. The sudden fall in the price of UST triggered an enormous arbitrage opportunity.
The opportunity created tremendous sell pressure for LUNA resulting in the coin losing 100% of its value in less than a week. LUNA currently trades at $0.000024, a massive drop from its all-time high of $119.18 recorded last month according to data from CoinMarketCap.