Terra (LUNA) was among the top performing altcoin projects of 2021. But Terra’s algorithmic stablecoin, UST, lost its peg to the dollar last May. Thereupon, an unprecedented sales frenzy emerged in altcoin. As a result, the value of Terra’s native token LUNA soon wiped out all its gains. Many Terra investors lost almost all of their funds. Now, 2 altcoins are experiencing events similar to those of Terra. The price of altcoins has drastically depreciated.
New LUNA case pushes 2 altcoins to bottom
Solana-based algorithmic stablecoin protocol Nirvana suffered a major disaster. The project is estimated to have a flash credit. Therefore, the project is currently facing a $12 million funding gap. Due to the aforementioned funding gap, Nirvana’s stablecoin, like Terra’s UST, lost its peg to the dollar and collapsed to a large extent. Stablecoin NIRV’s value is currently trading at $0.09, while it should be stable to the dollar. In other words, the value of crypto money has decreased by up to 91%. As a result, Nirvana’s ANA token dropped similarly to LUNA. At the time of writing, ANA has lost 85% in the last 24 hours, similar to the stablecoin it is linked to. That means a drop from $8.9 yesterday to $1.5.
However, according to analysts, the drop in Nirvana (ANA) price was already expected. Due to the lack of liquidity, the previous price of ANA had to drop rapidly. This reduction would be up to the floor price, which would be agreed upon by an agreement between the ANA team and its investors. As we reported on cryptokoin.com, stablecoins are facing a difficult time after the disaster of Terra’s (LUNA) stablecoin UST. TRON stablecoin USDD also faced some similar issues a few weeks ago. However, USDD is now in good shape.
What is Nirvana (ANA)?
Nirvana is the first native computing stablecoin project on the Solana network. It is based on a Terra-like dual token system, whose liquidity is controlled by the protocol. Value is split between cryptocurrencies ANA and stablecoin NIRV. The ANA, a store of value coin, can be printed directly on the official website. So, ANA stands out as an altcoin that is directly bought by the stablecoin. Nirvana’s treasury funds provide base price support for ANA. Thus, the liquidity pool generates liquidity so that the market can sell ANA. This is the key to Nirvana’s stabilization trying to protect capital from the floor price. However, when staking via ANA, NIRV can only be loaned at the maximum value of the base price. They also pay a 3 percent transaction fee due to this deal. On the other hand, stablecoin NIRV can be distributed as debt by staking ANA or purchasing it on the secondary market.
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