TerraUSD (UST) is pegged to the price of a dollar and is secured by Terra (LUNA). LUNA is an asset reserve that ensures the stability and security of the UST through the seigniorage process (income received from an emission of money). Miners also play a significant role in Terra's security. Miners participate in a proof-of-stake ([PoS](https://coinmarketcap.com/alexandria/article/proof-of-work-vs-proof-of-stake)) consensus, providing stability by absorbing short-term demand volatility for Terra. After all, stable demand for mining is one of the main requirements for security and stability. Therefore, the TerraUSD protocol strives to provide stable rewards in all economic conditions. This way, TerraUSD can provide compensation to those who protect and build the network.

TerraUSD (UST) is a stablecoin built on the Terra blockchain. The UST token has no technical support. Instead, the creation of the UST is facilitated by burning LUNA tokens. The UST value fluctuates because it’s driven by supply and demand for the asset and the US dollar value. When the value of the UST exceeds a dollar, LUNA holders can sell tokens for UST. As a bonus, due to the increase in the UST supply, the prices for LUNA are also growing. When supplies are reduced for profit, UST tokens can be sold for Terra (LUNA). This action returns the UST price to the target level. Consequently, a certain amount of LUNA is burned, which creates scarcity and increases their value. As of June 2021, the maximum supply is about 1.93B UST, and its qualities of scalability and functionality make TerraUSD (UST) one of the most notable stablecoins in the cryptocurrency market.

The Luna Foundation Guard (LFG) is the organization managing Terra, the company behind the LUNA and UST tokens. LFG made headline news when it [repeatedly bought Bitcoin](https://coinmarketcap.com/alexandria/article/luna-hits-all-time-high-of-106-as-excitement-over-bitcoin-investment-builds), leading to a [LUNA all-time high](https://coinmarketcap.com/alexandria/article/luna-hits-all-time-high-of-106-as-excitement-over-bitcoin-investment-builds) only one month before the UST depeg. Although the declared goal of the Luna Foundation Guard was to accumulate BTC worth $10 billion, it had to liquidate its Bitcoin reserve in an attempt to save the UST peg. At the time of writing, it is unclear whether LFG will continue buying Bitcoin in the future.

On May 9, 2022, UST [depegged and plunged](https://coinmarketcap.com/alexandria/article/are-algorithmic-stablecoins-dead-already-a-full-breakdown-of-the-terra-crash) from $1 to a low of $0.68. At the time of writing, it is unclear whether UST will recover its peg. After UST started trading slightly below its dollar peg, the [Curve](https://coinmarketcap.com/currencies/curve-dao-token/) pool containing UST got progressively emptied — people were cashing out their UST for other stablecoins. At the same time, short selling of LUNA drove the price of LUNA, the collateral for UST, down. This downwards price pressure forced Terra to mint even more LUNA in an attempt to stop the downwards spiral of UST. This diluted the price of LUNA but did nothing to restore the peg. Even a $1.5 billion sale of BTC out of Terra's treasury did not succeed in restoring faith in UST. Akin to a bank run, UST holders would rather take pennies on their UST than redeem it for LUNA. You can read the full breakdown of the UST depeg [here.](https://coinmarketcap.com/alexandria/article/ust-stablecoin-implodes-and-falls-to-0-68-bitcoin-reserves-liquidated-luna-crashes-50)

* Enhanced Scalability - TerraUSD is an algorithmic[ stablecoin](https://coinmarketcap.com/alexandria/article/what-is-a-stablecoin) with a value equal to the face value of minted stablecoins. To issue 1 TerraUSD, you need to burn 1 LUNA reserve asset. It turns out that TerraUSD's monetary policy scales nearly without limits, thereby helping DeFi projects reach their full potential. * Easy Exchange - The stablecoins in the Terra ecosystem share the total liquidity, meaning you can exchange TerraUSD for[ TerraKRW](https://coinmarketcap.com/currencies/terra-krw/) (their stablecoin pegged to the Korean Won) with minimal fees. * Passive Income Potential - Additionally, users can gain passive income using TerraUSD with the Anchor protocol's stable interest rates. Anchor is a lending protocol that promises a 20% return on UST savings. Additional and steady income appears through rewards in PoS chains, which maintain their stability due to commissions and inflation. This nuance will make it possible to form a reliable interest rate. * Interoperability - With the Dropship bridge protocol, TerraUSD allows blockchain ecosystems to be connected. Dropship integrates TerraUSD into numerous[ DeFi](https://coinmarketcap.com/alexandria/glossary/defi) and[ DEX](https://coinmarketcap.com/alexandria/glossary/decentralized-exchange-dex) platforms, and most importantly, moves assets between chains. LUNA supply and demand determine the value of TerraUSD. Thus, a stable UST cost is guaranteed as the Dropship protocol helps maintain scalability. To summarize, TerraUSD (UST) is the first decentralized stablecoin that provides interest earnings, incredible scalability, and easier interchain movement.

Do Kwon and Daniel Shin founded[ Terra (LUNA)](https://coinmarketcap.com/currencies/terra-luna/) in April 2019. In September 2020, they launched TerraUSD on Bittrex Global. Since that date, TerraUSD has outstripped many stablecoin competitors in the market, such as[ GUSD](https://coinmarketcap.com/currencies/gemini-dollar/) (Gemini) and[ PAX](https://coinmarketcap.com/currencies/paxos-standard/) (Paxos). Terra is TerraUSD's own blockchain, the creation of Terraform Labs (a subsidiary of Terra Alliance). Do Kwon is the CEO of Terraform Labs. He is a former software engineer at Microsoft and Apple. He also served as CEO of Anyfi, a startup providing decentralized solutions for wireless mesh networks. Kwon is included in the Forbes[ 30 Under 30](https://www.forbes.com/under30/list/2019/asia/finance-vc/#14e4d974baab) list of the world's most successful entrepreneurs. Co-founder Daniel Shin is a talented economist and entrepreneur. Before Terra Alliance, he co-founded Fast Track Asia, a startup incubator, and managed to co-found and lead TMON (Ticket Monster), a South Korean e-commerce platform.

TerraUSD ([UST](https://coinmarketcap.com/currencies/terrausd/)) is the decentralized and algorithmic[ stablecoin](https://coinmarketcap.com/alexandria/glossary/stablecoin) of the Terra blockchain. It is a scalable, yield-bearing coin that is value-pegged to the US Dollar. TerraUSD was created to deliver value to the Terra community and offer a scalable solution for[ DeFi](https://coinmarketcap.com/alexandria/article/what-is-decentralized-finance) amid severe scalability problems faced by other stablecoin leaders like[ Dai](https://coinmarketcap.com/currencies/multi-collateral-dai/). Thus, TerraUSD promises users a higher level of scalability, interest rate accuracy, and interchain usage. TerraUSD provides several benefits that have made it a stand-out stablecoin competitor. Due to its minting mechanism, UST meets the requirements of DeFi protocols that it uses without losing scalability. UST can also be easily added to crypto wallets by simply integrating TerraUSD as a payment method. Another area where TerraUSD has shown its power is[ DApps](https://coinmarketcap.com/alexandria/glossary/decentralized-applications-dapps). For example, platforms that mint fungible synthetic assets and track real-life asset prices use UST as a pricing benchmark. TerraUSD (UST) was launched in September 2020 (in collaboration with Bittrex Global) and has since gained the reputation as the most scalable stablecoin. UST can be used in conjunction with[ LUNA](https://coinmarketcap.com/currencies/terra-luna/), Terra's non-stablecoin crypto, or as a standalone token.