Tether Lost its Peg Amid Ongoing Stablecoin Crisis

Last weekend, UST, the third-largest stablecoin, was initially de-pegged by a few cents. However, its demise has been massive since then. On May 11, 2022, it momentarily plummeted to $0.2998, a 71 per cent drop from its dollar peg.

According to CoinMarketCap, the coin is currently trading at $0.62.Unlike Terra, which maintains its $1 peg by trading a paired token called Luna, Tether claims that its tokens are backed by real money, even though the company has been chastised for its lack of transparency and was fined $41 million by the US Commodity Futures Trading Commission in 2021 for making false statements about its reserves. Tether's CTO, Paolo Ardoino, claimed that the company is honouring $1 USDT redemptions and that the company has handled more than $300 million in the last 24 hours "without breaking a sweat."

In the typically very volatile crypto marketplaces, stablecoins are considered a comparative haven. They are kept constant by being pegged to other assets, such as fiat money and real assets like gold, or by an algorithm. Tether is the world's largest stablecoin and the third-largest cryptocurrency overall, with a market valuation of more than $80 billion. It plays a crucial function in the digital market, serving as a means of completing transactions and storing value.