HONG KONG (Reuters) – Stablecoin TerraUSD, a digital token that is meant to be pegged 1:1 to the U.S. dollar, dropped to 30 cents on Wednesday, as traders waited for a recovery plan promised by its founder.
The collapse of the stablecoin this week has roiled cryptocurrency markets, already under pressure alongside tumbling stock markets.
TerraUSD, also known as ‘UST’, is a so-called algorithmic stablecoin whose value is derived by complex processes, but it is linked to another paired token called Luna, which is free floating.
It had been one of the largest by market capitalisation, but its peg collapsed this week, and on Tuesday morning TerraUSD fell below $0.70.
It regained some ground later in the day, but on Wednesday, the token’s price dropped as low as $0.3062. It was last trading just above 40 cents, according to price site Coingecko.
Do Kwon co-founder of Terraform Labs the company behind the token tweeted on Tuesday: “close to announcing a recovery plan for UST. Hang tight”.
(Reporting by Alun John; Editing by Kim Coghill)
