Futures tracking the two tokens racked up nearly $18 million in liquidations over the past day in a higher-than-usual move.

Tokens related to the Terra ecosystem saw volatile trading in the past 24 hours amid legal developments against issuing company Terraform Labs, data shows.

Prices of Luna (LUNA) gained as much as 30% – from $2.65 on Thursday to $3.44 on Friday morning – then fell steeply even as the broader crypto market remained flat. Luna Classic (LUNC) gained as much as 34% before sliding this morning, data from CoinGecko shows.

Such volatility arose amid reports of the U.S. Securities and Exchange Commission (SEC) investigating whether Terraform Labs violated U.S. laws regarding how it marketed its ecosystem tokens.

Futures tracking the two tokens saw nearly $18 million in liquidations while losses on futures of other major cryptos, apart from bitcoin and ether, remained under the $3 million mark.

The LUNA was issued to holders in late May following the depeg of algorithmic stablecoin terraUSD (UST) in early May – a move that saw the value of old Luna (now rebranded as LUNC) to fall as much as 99.7%. Value locked on decentralized finance (DeFi) apps in the Terra ecosystem fell by $28 billion in addition, as reported.

The liquidations marked the highest losses for traders of the new LUNA tokens so far, data shows, with nearly $5 million in losses. However, LUNC futures saw higher losses at over $12 million, suggesting retail traders are continuing to prefer LUNC trading over LUNA.

Crypto firms Bybit and Binance are currently the only exchanges to offer LUNA futures to traders, while OKEx and Huobi offer LUNC futures. OKEx, popular in Asia, saw over $9 million in liquidations alone, the highest among its counterparts.

LUNA trades over $3.06 at writing time. LUNC trades just over $0.00007647 with gains falling to 7% for traders in the past 24 hours.

The post Terra’s Luna, Luna Classic Tokens See Volatile Trading Amid New Developments appeared first on Crypto Insider.

Terra believes that decreasing the amount of UST in circulation, while increasing the amount of available LUNA, is the easiest way to return the UST to a peg.

Terra believes that the downwards pressure on UST’s peg is diluting Luna, impeding recovery for both while creating an excess of UST, and the way to solve this is through burning UST and increasing the available pool of Luna.

“The primary obstacle is expelling the bad debt from UST circulation at a clip fast enough for the system to restore the health of on-chain spreads,” said Terra in a Tweet.

Algorithmic stablecoins like UST are supposed to be automatically pegged to the price of another currency. As explained in a prior CoinDesk learn article, traders can swap LUNA for UST at $1 regardless of the market price because the algorithms in the backend will manage the supply of LUNA creating enough scarcity to justify the $1.

A token burn refers to taking crypto out of circulation on the blockchain. It can be thought of as a deflationary event, because it would increase the value of the remaining blockchain. For token holders, it would be a similar event to a share buyback.

In a proposal put forward to token holders, Terra said that it wants to burn the nearly 1 billion UST (roughly $690 million) in the community pool while increasing the Base Pool of LUNA available to 100 million which in turn increases minting capacity to over $1 billion. This will help expedite the outflows of UST from the system, and thus pushing it back closer to its peg, while pushing down the price of Luna.

“Currently, the burning of UST is too slow to keep pace with the demand for excess UST to exit the system, which is hindered by the BasePool size,” reads the proposal. “Eliminating a significant chunk of the excess UST supply at once will alleviate much of the peg pressure on UST.”

Some comments on the proposal asked if this happened because of a bug in Terra’s coding, or if it was also a product of a broader market downturn driven by the decline in bitcoin’s price.

Validators of the network are able to vote for this proposal. According to a vote tracker, the Yes side has received 50.47% of the vote while the abstain side has 49.1%. 87.8% of eligible voters have already cast a ballot, and the pass threshold is 50%.

The post Terra Proposes Token Burn and Increase in Pool Size to Stop UST Dilution appeared first on Crypto Insider.

Some 58% of LUNA traders were betting on higher prices even as the tokens fell yesterday.

Futures traders lost $106 million on Terra’s LUNA in the past 24 hours as prices fell below $7.

Data shows some 58% of traders were placing futures bets on higher LUNA prices despite yesterday’s drop. That move accounted for over $63 million in liquidations, a higher-than-usual figure and one of the largest in the history of LUNA futures.

However, $387 million in open interest – or the amount of unsettled futures contracts – continues to exist at writing time, suggesting there could be more liquidations or volatile price action ahead as traders take profits or get liquidation.

Algorithmic stablecoins like UST are backed by a basket of assets, such as LUNA and bitcoin (BTC), without depending on any centralized third party to hold those assets. This week, however, UST lost its peg and fell to as low as $0.66 on Monday night before recovering to the $0.90 level on Tuesday.

Wednesday was not as kind in terms of recovery. UST fell to under $0.35 this morning as trader sentiment around the stablecoin dropped. This was despite the Luna Foundation Guard (LFG), a non-profit formed earlier this year to maintain a reserve backing for LUNA, liquidating its bitcoin holdings in an effort to try and save UST’s peg.

LUNA’s drop was among the steepest for a major cryptocurrency in recent times. Prices fell 85% in the past 24 hours, and 32% in the past hour alone as traders priced in contagion risks to the LUNA tokens as TerraUSD (UST), the platform stablecoin pegged to U.S. dollars, lost its peg earlier this week.

Part of LUNA’s decline came as parent firm Terra apparently issued more tokens to sell to the open market and raise money to back UST. As per its design, $1 worth of LUNA can be exchanged for exactly 1 UST, or vice versa. The additional supply could have contributed to LUNA’s tremendous price plunge in the past 24 hours.

The post UST Falls to $0.35, Terra Futures See $106M in Liquidations appeared first on Crypto Insider.

The move comes after UST briefly lost its peg to the U.S dollar over the weekend.

Luna Foundation Guard (LFG) will lend $1.5 billion in bitcoin (BTC) and TerraUSD (UST) to defend the peg of its algorithmic stablecoin to the U.S. dollar.

In a tweet thread, the Singapore-based LFG said it would loan $750 million worth of BTC to trading firms to help protect the peg and also loan $750 million in UST to accumulate bitcoin to help normalize the market.

“The traders will trade the capital on both sides of the market to help accomplish both #1 and #2, eventually maintaining parity of the LFG Reserve pool (denominated in BTC) as market conditions progressively stabilize,” LFG wrote in the thread.

UST relies on another token, LUNA, to keep its price of a dollar via a set of on-chain mint and burn mechanisms and is one of the largest algorithmic stablecoin.

In a separate tweet thread, Do Kwon, the project’s founder, said that the move to loan out $750 million of bitcoin shouldn’t be seen as LFG trying to exit its BTC position but rather increasing the liquidity around the UST peg. LFG will buy more BTC if UST expands from here, which we think is the more likely outcome,” Kwon said.

Over the weekend, the UST briefly lost its peg to the U.S. dollar, falling to $0.987 before climbing back to $1. At the same time, LUNA dropped 10%.

Part of the reason why UST briefly broke its peg was the large quantities of UST that were withdrawn from liquidity pools on decentralized exchange Curve, while $192 million of UST was dumped.

The post Luna Foundation Guard Lens $1.5B in BTC and UST for Stablecoin Peg appeared first on Crypto Insider.

It becomes the sixth blockchain to be supported by the popular data platform.

As Terra’s influence in decentralized finance (DeFi) grows, traders are now equipped with new tools to track it.

Popular wallet profiler and analytics platform Nansen announced on Thursday that it has expanded its coverage to Terra, now the sixth blockchain the service analyzes.

The coverage comes at a time when Terra is emerging as a DeFi powerhouse and its native token, LUNA, is bucking wider market trends.

Terra is currently the second-largest chain in terms of total value locked (TVL) at $25.6 billion, comfortably outstripping Binance Smart Chain’s $11.9 billion. Likewise, LUNA is up 65% on the month, while ETH has fallen by 5%.

Part of the popularity of the chain is attributable to its high performance. Per a press release provided to CoinDesk, “research from Nansen shows that the total number of transactions on Terra hover around 50% of Ethereum’s total transactions while gas fees paid are between 0.2%–0.6% of that paid on Ethereum.”

However, detractors say that much of the volume that Terra has attracted is due to Anchor, a stablecoin minting protocol that yields over 19% to depositors.

The protocol is often referred to as pyramidal or “ponzinomic” in nature, and high-profile Twitter personalities have been engaging in bets about the price of LUNA in part as a proxy for Anchor’s success.

The post Nansen Adds Terra for On-Chain Analytics as Home of LUNA Grows as DeFi Hub appeared first on Crypto Insider.