Terra’s UST, the third-largest stablecoin by market cap, dropped to $0.69 in Monday trading, an all-time low according to CoinMarketCap data, even after the Terra-supporting Luna Foundation Guard rushed a $1.5 billion loan to shore up the currency.
Unlike USDC and Tether, which are ostensibly backed by cash and assets in the bank, the UST stablecoin is designed to hold 1:1 parity with the U.S.
So, when the price falls to, say, $0.99 as it did over the weekend, traders can swoop in to buy at a discount then sell at $1.00 and pocket the difference.
So, over the weekend it decided to make use of a backstop strategy it’s been pursuing over the past few months.