The fallout from the collapse of Terra (LUNA) and its stablecoin TerraUSD (UST) rippled across the cryptocurrency market on May 11, as projects with any kind of association with the DeFi ecosystem saw their prices drop. .

The forced sale of Bitcoin (BTC) holdings backing a portion of UST also played a role in BTC’s current drop to $29,000 and analysts fear that DeFi platforms holding liquidity pools made up mostly of UST and LUNA will collapse.

LUNA, ANC, ASTRO and MARS in USDT pairings. 4 hour chart. Source: TradingView

Terra based protocols suffer

The projects with the worst prospects are those that are hosted on the Terra protocol, including Anchor Protocol (ANC), Astroport (ASTRO), and Mars Protocol (MARS).

As shown in the chart above, Anchor Protocol (ANC), Astroport (ASTRO), and Mars Protocol (MARS) saw their token prices drop over 80% since May 4, when the LUNA price began to correct for the first time.

All of the protocols in question are DeFi-focused, meaning they had strong integration with UST as the main stablecoin for their liquidity peers, as well as LUNA as a major source of value locked in their smart contracts.

As long as UST remains outside of its $1 peg and LUNA trades down 98% from where it was just 7 days ago, it is unlikely that these protocols can recover from today’s fallout.

The Interblockchain Communication Protocol also took a hit

Assets in the Cosmos ecosystem were also heavily affected by the collapse of UST. ATOM and other tokens like Mirror Protocol (MIR), Osmosis (OSMO), and Kava that use the Interblockchain Communication Protocol (IBC) have been drastically corrected due to their integration with Terra.

ATOM/USDT vs. KAVA/USDT vs. MIR/USDT vs. OSMO/USDT 4-hour chart. Source: TradingView

The price drop for these assets was less extreme than for those hosted on the Terra protocol, but their proxy for Terra has not protected them from contagion.

Related: LUNA Collapse Spawns Theories and You Told the Crypto Community So

Maker benefits from volatility

Maker (MKR) is the only bright spot to emerge in trading on May 11, as crypto traders now find themselves embracing Dai (DAI) as the “best” decentralized stablecoin option on the market.

The price of MKR soared 124% in trading on May 11, going from a low of $1,025 to an intraday high of $2,299 before settling back to $1,278.

MKR/USDT 4-hour chart. Source: TradingView

As the market digests the current correction and news of fund and protocol crashes emerges, it will be interesting to see how other stablecoin protocols such as Frax Share (FXS), USDD and mStable (MTA) perform and whether crypto traders will avoid or not these projects for more centralized options.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should do your own research when making a decision.

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