It was depreciated by its algorithmic stabilizecoin TerraUSD (UST), and crashed to a record low of $0.30. The outcome has cast doubt on the future, not just of algorithmic but also 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.