'$DAI Will Die' Tweet Twisted Back on Terra's Kwon as UST Loses $1 Peg

Terra's UST briefly fell below $6.5 billion in market cap on Wednesday morning, allowing DAI to be the fourth-biggest stablecoin on the market for a time.

AccessTimeIconMay 11, 2022 at 8:18 p.m. UTC

Helene is a U.S. markets reporter at CoinDesk, covering the US economy, the Fed, and bitcoin. She is a recent graduate of New York University's business and economic reporting program.

Just two months ago, Do Kwon, the founder of the Terra blockchain, tweeted to his followers that DAI, a five-year-old stablecoin, would succumb to the fast-rising growth of Terra's stablecoin, UST.

Fast forward to this week, and it's UST, not DAI, that needs a lifeline.

The algorithmic stablecoin hosted by the Terra Network lost its dollar peg twice this week, falling to as low as 23 cents on Wednesday. As a stablecoin, the price of UST is supposed to keep a value of $1 at all times.

Because of that price drop, DAI, which is built on the Ethereum blockchain, briefly surpassed UST as the biggest stablecoin by market capitalization based on a decentralized finance (DeFi) protocol, and the fourth largest of all stablecoins.

DAI, which is maintained by the decentralized finance protocol MakerDAO, currently has a market cap of $7.54 billion (with a price holding fast to the $1 peg), while UST was briefly at $6.43 billion on Wednesday, according to data from Messari, before rebounding to $12.9 billion in the afternoon.

But there’s still a long way to go before the algorithmic stablecoin reaches its original market cap of around $18 billion, which is what it was before the crash that started three days ago.

In the meantime, the schadenfreude on Twitter was palpable on Wednesday:

Representatives of Do Kwon have not responded to a request for comment as of press time.

DAI is a dollar-pegged stablecoin, meaning that its value is backed by dollars as opposed to using on-chain mint-and-burn mechanics. But both stablecoins operate in decentralized finance (DeFi) protocols, which is why they are often compared.

DAI is maintained by MakerDAO.

Do Kwon has said he was working on bringing the UST stablecoin back to a $1 value, and tweeted early Wednesday that he was working to "rebuild UST." It was trading at 58 cents at press time, still 33% down over the past 24 hours.

For what it's worth "Do Kwon" was trending on Twitter on Wednesday. Here's a smattering of the pile-on:

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Helene is a U.S. markets reporter at CoinDesk, covering the US economy, the Fed, and bitcoin. She is a recent graduate of New York University's business and economic reporting program.

CoinDesk - Unknown

Helene is a U.S. markets reporter at CoinDesk, covering the US economy, the Fed, and bitcoin. She is a recent graduate of New York University's business and economic reporting program.

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