Though the sell-off within the broader cryptocurrency market has slowed down a bit, that’s probably not the case for Terra’s LUNA. The LUNA cryptocurrency is down one other 12% as we speak dropping underneath $44 whereas extending its weekly losses to 35%.
Over the past month, the LUNA worth has tanked greater than 50%. Whereas different altcoins within the prime ten crypto-list have stabilized, Terra’s free-fall appears a matter of concern.
As we reported, the unfavorable sentiment round Terra is due to the ecosystem’s hyperlink with Magic Web Cash (MIM). Moreover, Terra’spartner Abracadabra protocol holds an in depth affiliation with Wonderland.
The Abracadabra protocol deposits UST in change for MIM which they will additional stake on Wonderland and generate a yield of 13000% APY. Well-liked crypto-journalist Colin Wu explains:
The Abracadabra protocol permits customers to deposit UST to borrow MIM and mechanically change MIM for UST. The UST mechanism determines that the worth of Luna is linked to the whole quantity of UST locked. So the issue of MIN poses a hazard to Terra’s ecology.
Will Terra Get well From this Market Fall?
Effectively, it’s tough to say as to how Terra’s LUNA will carry out going forward. There’s quite a lot of buzz round Terra’s affiliation with the Anchor Protocol because the protocol is accountable for producing the very best demand for Terra’s UST stablecoin.
Anchor is a protocol the place you possibly can earn in your $UST and you may borrow $UST utilizing your $LUNA or $ETH as collateral. To grasp extra, verify the under thread from crypto analyst Jarzombek who explains the complete correlation and yield era utilizing LUNA.
Does $LUNA have an issue due to the @anchor_protocol ?
Is the entire @terra_money system in peril?
Full Thread 🧵 🧐 pic.twitter.com/53Z8LGSGwi
— Jarzombek 🌔 (@jarzoombek) January 27, 2022
Moreover, the Anchor protocol appears to be taking some corrective measures lately. Final Saturday, Anchor made an announcement that it’s rising its bLUNA LTV worth to 80%. Anchor notes:
Elevating LTV to 80% will enhance bLUNA collateral capital effectivity. This isn’t solely wanted to generate extra mortgage income from collateral however to additionally make the borrowing facet extra aggressive with different well-established lending protocol’s LTV ratios. Furthermore, rising the LTV may also encourage extra borrowing.