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Showing posts from January, 2022

The Brilliant Algorithm Behind TerraUSD (UST) on the Terra (LUNA) Blockchain

Edit: Yup. Ignore this article. The Brilliant Algorithm turned out to be not so brilliant.  Most cryptocurrency investors are familiar with stablecoins; incredibly useful crypto assets that are (usually) pegged to the US dollar. But the methods used to achieve the stability of these assets is often questionable and not necessarily decentralised. For example, USDC is a centralised crypto asset issued by Coinbase, and DAI, while appearing to be decentralised, has 61% of its collateral as USDC. USDT has severe transparency issues. So, is there a solution to all of this? Well, dear reader, this is where the Terra ecosystem comes in. Terra aims to provide algorithmically designed stablecoins that are fully decentralised; and that they have. The native token of the Terra blockchain is the LUNA, and its US-peg coin is the TerraUSD / UST. How it works Let’s take a dive into an overview of how UST works. Take a look at the following diagram [source: Terra YouTube Channel]: Let the