The world's largest crypto exchange Binance today announced that it has delisted both LUNA and stablecoin UST. The Terra ecosystem tokens were removed from both margin and spot markets at 12:40 am UTC today.
On Thursday, Binance warned users about delisting the LUNA and Tether (USDT) trading pair if the price of LUNA fell below $0.005.
Earlier this week, Binance had also temporarily halted the withdrawals of UST and LUNA owing to network congestion caused by the high volume of pending withdrawals.
LUNA, Terra's native governance and staking token plummeted 99.97% yesterday and currently trades at $0.00005395 accordion to data from CoinMarketCap.
What's behind the LUNA, UST crash?
LUNA's free fall is attributed to its pairing with UST.
UST is an algorithmic stablecoin. Unlike collateralized stablecoins like USDC and USDT, algorithmic stablecoins are not backed by real-world assets. Instead, this variety of stablecoin is governed by self-executing smart contracts.
LUNA is designed to help stabilize UST at its dollar peg with a "mint-and-burn" mechanism. Users could swap $1 worth of LUNA for UST, and vice versa. Each time LUNA is swapped for UST, that LUNA is also burned (crypto jargon for destroying the token and removing it from circulation).
This week though, this mechanism came under immense pressure until UST began rapidly losing its dollar peg. As investors attempted to exit UST into LUNA, the latter token was minted en masse.
This arbitrage between UST and LUNA resulted in high sell pressure on LUNA accelerating the token crash.
The previously dollar-pegged UST is now trading at $0.17 today according to data from CoinMarketCap.
What's more, the Terra Builder Alliance, a group attempting to save the Terra ecosystem amid its collapse, today created a proposal to permanently stop the operations of UST as an algorithmic stablecoin.
Once all UST has been swapped to LUNA, the stablecoin will cease to exist in its current form, according to the proposal.
The proposal aims to create a collateralized stablecoin, but it's unclear what that would look like.
"It doesn't look like the peg stability mechanism is going to restore peg in the short period of time," said the proposal created by TerraBuilder Alliance. "Once the UST has been swapped with Luna at the new network launch, it will cease to exist in its current form and will be relaunched after genesis in collateralized form."
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Source: Decrypt.co
Notice of removal of some margin and spot trading pairs at 12:40am UTC, May 13, 2022. 
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