What is the difference between Luna and Ust?

Because 1 UST was defined as being equal to $1 worth of Luna, that meant that while the amount of Luna handed over in a swap for UST would vary, a holder of $1 in UST would always get $1 in value back. That created arbitrage incentives for traders that were designed to keep the value of UST at or close to $1.

What happened to Luna and Ust?

What happened here was that a lot of people started taking out their deposits to Anchor, which puts a huge selling pressure on both LUNA and UST. At some point, it was no longer possible to redeem 1 UST for $1 worth of LUNA. This led to the deployment of the Bitcoin reserves to try to defend the peg.

What is Ust (terrausd)?

What is UST? While USDT is backed by actual fiat reserves (although questionable) that can be redeemed, UST (TerraUSD) is an algorithmic stablecoin that keeps its value because of another token called LUNA, the main coin of the blockchain of the same name. For brevity’s sake, 1 UST is supposedly redeemable to $1 worth of LUNA.

How does Luna work?

Whenever either of them is exchanged, the currency is taken out of the circulation by the smart contracts programmed to maintain the system. When the market value of one UST is greater than $1, there is an incentive to trade $1 worth of Luna for one UST, which is worth more than one dollar, making an instant profit.