Terra's two main token are in freefall.
UST, a stable coin that is meant to maintain a $1 peg, plummeted more than 50% on Wednesday. At 4 a.m. it was trading at 35 cents. According to the data from CoinGecko.
Sister token luna dived more than 80%.
The other cryptocurrencies fell along with them, with ether falling 4% to $2,286.
Stablecoins are like bank accounts for the cryptocurrencies economy, offering a sound store of value to avoid the kind of volatility that has become synonymous with them.
UST uses a complex system of minting and burning token to adjust supply and prices. Its price has fallen under the pressure of a sell-off in cryptocurrencies, causing further panic in the market.
The creator of the coin has amassed billions of dollars through his Luna Foundation Guard fund to support UST in times of crisis. The fear is that Luna Foundation Guard will dump those bitcoins onto the market and cause a bigger sell-off.
It was the lowest level of the year. The world's biggest digital coin is now above that level. Since setting an all-time high of nearly $69,000 in November, it has fallen about 50%.
The situation highlights the vulnerability of stable coins like UST, according to a research analyst.
UST has grown to be both an important and controversial part of the community.
The phenomenon is new. UST has grown to become a major player in the coin economy, with a large circulating supply.
Luna Foundation Guard's response to prop up its stable coin will be watched by investors. He said he was close to announcing a recovery plan.
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