Not sure if this is a question for the Anchor forum as such, but do we know what steps are being taken to bring the UST back to being pegged with USD?
Hi, this thread has an explanation of what’s going on and how the system is re-calibrating:
The 2 points above is essentially the same considering there is significant lag in UST going up to $1. The time arb mentioned above is exactly what is the problem here. Stablecoins need to be stable; they are not stable if they are 5% below the peg one day and 3% below the next and then 6% below on the third day. If the peg is broken, it needs to be restored asap - I imagine less than a few hours - to maintain confidence in the currency.
How do Maker keep DAI more or less stable. Even if DAI goes down to 0.991, it goes back up in a few minutes or hours? Why cant UST achieve this currently?
It discourages me from holding UST if I have to pay a BTC price of $2000 higher than with USDT. I guess I’m making around 10% more by staking UST over USDT but that’s significantly offset if i’m paying 5% more for my crypto investments during a dip.
And that’s the price of the extra 5% you’re receiving I guess… as expected, no free lunch.
It’s not as expected though is it…?
We didn’t expect 1 UST to be worth significantly less than 1 USDT.
And when investing in Anchor we’re not expecting the caveat that 20% is a great rate, but bear in mind UST will be worth less against BTC than USDT will, when you come to invest.
So it’s an issue that it would be good to know is going to diminish in occurrence as the Anchor and Terra protocols become more robust.
The outcome of UST < $1.00 is not as expected. There were flaws in the system design, which are being addressed.
It is not surprising to me that an algorithmic stable (UST) takes longer to calibrate back to peg than “reserve” stable coin like DAI (backed by ETH and USDC), USDC (backed by USD & equiv), or USDT (backed by some USD, some related party loans, and some other “cash equivalents”).