Terra’s total value locked suffered a major fall, losing as much as $14 billion because of a reduced DeFi investor interest and a bearish market.
The blockchain protocol has remarkably lost around 78% in TVL since the first quarter of 2022. It started the year with a TVL of $14.8 billion but May 11, 2002, revealed a massive dip of $4.02 billion.
Its native token, LUNA has dangerously crashed from $120 to now just around $0.02 – a correction of 99%. The nearly 100% drop happened within 24 hours from May 11 to 12 of this year.
Suggested Reading | Will LUNA Go Extinct After Being Delisted By Binance, Bybit And eToro?
LUNA Keeps Crashing
The stock market made its corrections with the SPX traversing under the 4,000 level and then Bitcoin has suddenly retraced to $25,000, a level that was last seen in December 2020.
Bitcoin’s strength has a direct correlation with altcoin performance. So, when Bitcoin crashes, altcoins tend to follow the lead.
The recent crash of Terra (LUNA) is associated with the ongoing volatility in crypto prices. A lot of investors see the potential of buying Bitcoin and Terra now that it’s priced relatively low.
Understanding The Stablecoin
Many people seem to be confused with Terra and LUNA. Well, Terra refers to the name of the token, and LUNA is its symbol. Do Kwon is the CEO of Terra Labs, the creator of both TerraUSD (UST) and Terra (LUNA).
Terra is a stablecoin that is hedged on fiat money or US dollar similar to Tether.
Crypto total market cap at $1.28 trillion on the daily chart | Source: TradingView.com
Investors need not worry about a thing when they invest in Terra because the company is said to be backed by over $3.5 billion worth of BTC reserves.
This used to be the 6th largest crypto in the world with a market cap of $40 billion but it has plummeted to 11th place with a market cap of $9.6 billion to date.
Binance Ditches LUNA
Meanwhile, Binance, the world’s largest cryptocurrency exchange, has announced that it will delist its Tether (USDT)-margined Terra (LUNA) futures contracts, costing the cryptocurrency community millions of dollars.
Because of this, Binance said it will no longer offer cross- and isolated-margin trading on the coin, as well as spot BUSD margined perpetual contracts.
LUNA/USDT perpetual contracts will be delisted if the price falls below 0.005 USDT, Binance announced in a blog post published on Thursday. “Precautionary actions” will be taken, the company said.
Suggested Reading | Robinhood Shares Up 20% After FTX Founder Acquires 7.6% Stake
In a related development, the dApps space seems to have been performing at its lowest which affected Terra. For instance, LUNA has decreased to more than 98% of TVL, and Anchor TVL slipped to more than 80% the previous month.
Other protocols that have added to the massive slump are the following: Aperture Finance, PRISM Protocol, Pylon Protocol, Risk Harbor, Mirror, Stader, Loop Finance, and Spectrum Protocol.
Featured image from iStock, chart from TradingView.com