The effect of an impulsive loss has taken over $15 billion from crypto value. And there are reports recorded about self-harm by those who have lost most of their savings in UST.
A Lot of people have sold off big parts of their crypto portfolio to recoup some of the damage, pulling the entire market down.
Even though the UST was an unusual algorithmic stablecoin unlike others, the question arises on the stability of other stablecoins too, such as tether and USDC. Boroughs says that, if the UST was attacked, then similar plays could be made against the others as well.
“The question in our minds becomes, does what happened to UST spread to other stablecoin? If big whales found a playbook here that works to attract UST, we worry they may reuse that playbook in other areas of the market.”
The impact of UST’s collapse has caught the powerful politicians and regulator’s attention, as well. On this, the Secretary of Treasury Janet Yellen said that:
“UST’s depegging simply illustrates that this [stablecoins] is a rapidly growing product and there are rapidly growing risks.”
Further, the Securities and Exchange Commission member Hester Pierce on Thursday says that:
“One place we might see some [regulatory] movement is around stablecoins.”
This has been a very tough week for terra developers since UST collapsed, as people are questioning the use of bitcoin reserves. On this, The Luna Foundation Guard has tweeted about its bitcoin reserves falling from 80,000 to just 313, $2.2 billion to $9.2 million respectively.
And mentioned about the remaining reserves also in the tweet by saying they will be used to “compensate remaining users of UST, smallest holders first.” Kwon, the Terraform LAbs CEO, has the controversial plan for reviving Luna as well.
In response to all the above, the Terra official tweeted yesterday about the previous proposal Prop 1188 has been passed, “Burn the remaining UST in community pool + cross-chain liquidity incentive UST.” The application is unsuccessful still as it is facing technical errors, as it tried to disappear from the community pool and exceeded the existing number of USTs.
In addition the New proposal Prop 1747 has also come into existence with several updated parameters, this proposal would destroy the remaining UST in the community pool and the cross-chain liquidity incentive UST, if it gets voted.