After the collapse of the ecosystem’s algorithmic stablecoin TerraUSD value (UST), it crashed to an all time low of $0.30. This has raised doubts about the future not only of algorithmic stablecoins, but of all stablecoins.

UST’s success and stability were intertwined with its sibling, LUNA, which creates arbitrage opportunities that, in theory, should keep UST’s price steady. If UST’s price drops below $1, it can be burned in exchange for LUNA, which lowers the supply of UST and raises its price.