TerraUSD
About TerraUSD
The price of TerraUSD (UST) is $0.01572496 today, as of Sep 09 04:57 a.m., with a 24-hour trading volume of $10.50M. Over the last 24 hours, the price has increased by 1.20%. TerraUSD currently has a circulating supply of 5.84B and a market cap of $91.88M.
TerraUSD (UST) is a stablecoin hosted by the Terra network and created by South Korea’s Terraform Labs. TerraUSD is one of a number of Terra stablecoins pegged to key currencies. (Another example is TerraKRW, pegged to the South Korean won.)
The coins are all pegged to their respective currencies algorithmically, instead of using reserves of fiat currency. The algorithm employs Terra’s governance token luna (LUNA.)
The stability of the TerraUSD price is maintained indirectly via the “base” TerraSDR coin, which is pegged to the value of the International Monetary Fund’s (IMF) special drawing rights (SDR). The SDR is simply a unit of account defined in terms of other currencies including the U.S. dollar and the euro. SDRs were created by the IMF in 1969 to assist states struggling with financial liquidity. The SDR is useful for Terra because it shows lower volatility than any given currency trading against another.
The Terra system commits to be the counterparty to anyone wanting to swap TerraSDR with luna at the target exchange rate. For instance, if a TerraSDR was trading cheaper than one actual SDR, then a user would be able to profit by swapping one TerraSDR with the system in return for one SDR’s worth of luna. This swap would push down the supply of TerraSDR and push its price back up towards the target.
This means the system mints new LUNA in order to buy back TerraSDR when the price of TerraSDR falls below a certain level. It burns the TerraSDR that it acquires in doing so. Conversely, it mints new TerraSDR to sell when the price rises too high, then burns the LUNA it gets paid.
This, in turn, pegs the values of all of the other Terra stablecoins, because users are always permitted to exchange TerraUSD and the rest for TerraSDR at the effective market exchange rate between the underlying currencies and SDR.