Crypto is weathering a bitter storm. Some still hold on for dear life.

Stable coins are different. They are a DeFi experiment in a stable coin that doesn't peg itself to money or hold assets to stable its value. They are usually supported by a second token. Terra balances variations in the stable coin's value by increasing or decreasing the supply of Luna token through incentives, and investors can profit off these exchanges, which keeps them in business. This is a lot of thinking.

Before the Terra crash, stable coins were thought to be less stable than regular ones. Sam Bankman-Fried, the CEO of the FTX exchange and a notable billionaire, argued last week that the two types of stable coins are different from each other.

Why do you want to pursue algorithmic stable coins? Stable units of value that self-corrects independently and elegantly like water were supposed to be the holy grail of Defi. The appeal of the stable coins is that they don't rely on the real world and traditional markets to function. The system presumes that the human traders will act in a predictable way. If stable coins perform as promised, they could show that code is the future of finance.

It looked like Terra's experiment might work out. Terra closed a multi-million dollar sponsorship deal with the Washington Nationals. In March, it became the second most valuable network in the world, after Ethereum. Things went off course on Monday, May 9. Someone may have acted against the predictions of the algorithm and pushed the value down. The coin was designed to maintain a $1 value, but it crashed to below that.

Terraform Labs, the company that manages it, temporarily stopped transactions on its network to protect against further decline and then froze them again overnight, preventing token holders from taking anything. Terra's UST has continued to fluctuate under $0.50 since the network resumed.

Each company has a different explanation for why it is faltering. The launch of the NFT marketplace at the end of April may have put off investors and hurt its stock price. The Luna Foundation Guard, the nonprofit that supports Terraform Labs, had amassed $3.5 billion in the digital currency by the beginning of May, and then sold a portion of it in order to stay afloat as the price of UST began to fall. Some Terra/Luna supporters accused the companies of manipulating the market to cause UST to crash, a rumor that was vicious enough to prompt the companies to respond. There is a question of management. The CEO of Terraform Labs was behind a previous failed experiment, according to a report.