$UST maintains stability through a simple swap mechanism – 1 $UST can be exchanged for 1 dollar’s worth of $LUNA at any time.
If $UST becomes less valuable than $1.00, buyers can scoop it up and use the swap mechanism to sell it for $1.00, enabling them to make a profit. As buyers do this, demand for $UST causes the price to go up again until it reaches $1 USD. These economic incentives act rapidly to maintain $UST’s stability.
Following the move, Do Kwon, the founder of Terraform Labs (organization behind Terra), put out a tweet, reminding people that the stablecoin needs just to 5x to go above Tether and USDC.
$UST’s performance also helped $LUNA gain 17$ in the past 24 hours, crossing past $90.