On Thursday, the derivatives arm of Binance, Binance Futures, made an official announcement, stating that the trading services for TerraUSD (UST) and Luna will be deactivated. This statement comes from the collapse of both cryptocurrencies owned by the Terra network.
According to the statement made on the Binance platform, "Users are advised to close any open positions before the delisting time to avoid automatic settlement." However, the official announcement allays the fears of users with existing positions. The firm assured users that positions opened before the update won't be affected.
Additionally, to update margin tiers and reduce leverage tiers for LUNA perpetual contracts, the firm has begun to conduct automatic settlements.
Before the update, the maximum leverage for LUNA perpetual contracts available on the platform was 21-25x. However, according to the update, the maximum leverage tier is now 8x. Likewise, the 6x leverage tier will be replacing 6-10x leverage, while 7x leverage will replace 11-20x leverage.
Furthermore, UST was designed as a Stablecoin that uses algorithms. For UST to maintain its 1:1 ratio with the United States dollar, it depends on UST and LUNA swaps and LUNA token burns. Unlike UST, other Stablecoins like USD Coin (USDC) and Tether (USDT) have their values pegged to fiat currency.
Also, On Wednesday, May 11, the Stablecoin plummeted to $0.30. LUNA. On the other hand, lost over 99% of its worth.
The shock of the events caused the total market capitalization to fall to almost $600 billion threw the Cryptocurrency market. Also, owing to the events, Terra's token is no longer one of the top ten tokens according to market capitalization.
Before the statement released by Binance Futures, the firm had put UST and LUNA withdrawals on hold Tuesday. The suspension of withdrawals was due to the Terra network's massive token selloff. Also, the selloff on Tuesday caused the UST Stablecoin to fall to $0.67, thereby losing its 1:1 ratio with the U.S dollar.
In a tweet made by the CEO of Terraform Labs, Do Kwon, he knew his intentions to help the UST Stablecoin recover its 1:1 dollar peg.
"Before anything else, the only path forward will be to absorb the stablecoin supply that wants to exit before UST can start to repeg. There is no way around it,".
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