This is because the stablecoin UST, which was pegged to the dollar, has a link with Luna.
As the token is being produced at an exponential rate, the circulating quantity of Luna (LUNA) has surpassed 25 billion.
Because the TerraUSD (UST) peg and its link with Luna, the native asset of the Terra blockchain, broke broken, this has resulted in this current situation
Luna’s stock has been steady at roughly 325 million units over the previous several weeks. It jumped from 1.5 billion to 25.3 billion on Wednesday, and it’s continuing to expand at a rapid pace.
An emotional cycle is hurting both cryptocurrencies due to UST losing its peg and an enormous amount of selling pressure, as it did when The Block previously broke down. Stablecoin Luna’s peg to the US dollar is currently being maintained by traders exchanging UST for Luna. As the price of Luna falls, more Luna is being produced, creating a back-and-forth dynamic that has spiralled out of control.
In the previous two days, Luna’s supply has surged. The Block Research is seen in the image. Luna’s token value is steadily eroding because of the fast expansion of its circulating supply. Luna’s current market value is barely $0.005 compared to $80 six days ago, a drastic decrease.
Many people have been impacted by this, like YouTuber KSI, who reports that his $2.8 million in Luna is now only worth $1,000. He tweeted, “Yeah, I’m packing this in.”
It has been difficult for holders to sell tokens since they were being staked and would be able to trade in for up to three weeks.
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