Tragic tale of American conservatism is that of a rather dull man perpetually confused that his enemy is attacking him.

"I thought you were my friend!"
"Let's talk this through!"
"This is really extreme!"

And the perennial favorite,
"How would you feel if I did this to you?"

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An $18 billion stablecoin is losing its dollar peg with all the magical chaos of algorithmic stables, with a dash of Bitcoin systemic risk drama.

Here's everything you need to know.

The $UST Depeg Thread:


$UST is a dollar-pegged stablecoin that has depegged twice in the last few days, now hovering around $0.90 to the dollar.

Just a reminder on how $UST works:

You can always redeem $LUNA for $UST dollar-for-dollar, and vice versa.

If $LUNA is at $50, you can redeem it for 50 $UST.

Similarly you can redeem 50 $UST for 1

It's worth noting you can always redeem 1 $UST for $1 worth of $LUNA, even if $UST is worth <$1.

It's meant to be a stabilizing mechanism:

If $UST is trading at $0.99, arbitrageurs can buy it and redeem it for $1 of $LUNA.

We all know Stablecoins Require Utility™ to maintain demand and defend their peg.

So where does $UST get utility?

Simple, Anchor Protocol.

Anchor Protocol is (nominally) a money market, but the important tl;dr is it pays you 19.5% to stake $UST.

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