PLC Ultima is one of the coins with immense potential to explode this year. While the crypto market is on fire, and investors are rushing to the exits due to a complete loss of confidence in the space, PLC Ultima has shown positive gains even during the crypto crisis in Q2 2022.
Terra’s currency LUNA coin was one of the best performers in 2021, but since crypto started declining towards the end of 2021, its price has plunged about 80 per cent, making the coins almost worthless. Once valued at more than $50 billion, the stunning fall of the Terra stablecoin made the overall crypto market unstable, wiping out more than $200 billion in the space.
The reasons for the LUNA crash are deeper and are a warning of crypto price volatility. However, crypto analysts believe the developments the PLCU team is undertaking have immense potential to be the next big thing.
Terra UST and LUNA’s $59 billion collapse
Stablecoins offer a relatively safe haven in the highly volatile crypto market. They are designed to be tied to a fiat currency and should maintain a 1:1 peg with the U.S. dollar. However, recent events have proven that they are just as volatile as other cryptocurrencies.
Founded in 2018, Terra (LUNA) and TerraUSD (UST) were created by Terraform Labs to offer users the stability of fiat currencies while harnessing the power of blockchain technology for settlements that were faster. UST was the “algorithmic” stablecoin that would magically maintain its $1 peg using its sister token, LUNA. So instead of having cash and other assets held in reserve to back its token, the system uses a complex mix of code and Luna to stabilise the process.
- Basically, To create $1 UST, you have to burn $1 in LUNA
- To create $1 in LUNA, you have to burn $1 in UST
Fast forward to 2021, Terra grew rapidly to a $59 billion market cap and to get people to invest in UST and LUNA, the founders used all the correct language to imply low risk. Terraform Labs heavily promoted a “savings” protocol that offered a 20% Annual percentage yield (APY), and many investors participated in this fundraiser, exchanging real money for large amounts of LUNA.
So when the cost of TERRA went too high, this incentivised LUNA owners to print more. On the other hand, when TERRA went too low, the effect incentivised holders to destroy the currency in order to raise its price.
Obviously, all of this falls apart if you ask the right questions: Where does UST and LUNA’s value come from? Who would borrow money at 20% APY?
Well, the chickens came home to roost in May this year when UST depegged and dropped 95% from $1 to less than 5 cents in a few days. In the middle of the crash, investors started pulling their money out to cover losses elsewhere, and that triggered what is called a “death spiral” –
Terra tried to maintain the peg by minting more LUNA, but the death spiral continued until $59 billion evaporated into thin air.
Moral of the story: Unlike other stablecoin providers, UST wasn’t backed by actual U.S. dollars but rather by a complex algorithmic system that maintained the peg through a network of traders in the underlying cryptocurrency Luna.
PLC Ultima could emerge a silent winner of the crypto war
There is a lot that the PLCU team has accomplished that will be key in making PLCU outperform other stablecoins this year. According to Alex Reinhardt, founder of PLC Ultima, “PLCU is less affected by other crypto markets than other cryptocurrencies. Based on powerful technologies, it was created by a team of blockchain specialists from around the world. When bitcoin drops, the entire market falls, and PLCU stays more stable. In contrast to other crypto assets, we tie the currency to the real economy, which does not fluctuate as much. There is a huge and significant role played by the coin community in this. Our goal is to foster growth by building a community around a coin, promoting an ecosystem of products, and ensuring liquidity.”
The PLCU ecosystem already includes a physical PLC crypto debit card, which supports eight popular cryptocurrencies: PLCU, LTC, BTC, BCH, ETH, USDT, EOS, BAT, a crowdfunding platform, Platin Hero, and a marketplace, Platin Deal.
In the second half of 2022, the company plans to continue adoption of its blockchain-based payment system, Platin Pay. With Platin Pay, users can pay directly for an array of goods and services locally and internationally using major cryptocurrencies. It offers technical solutions for integrating payment module applications for online stores, and due to its high speed, users are protected from bitcoin and other cryptocurrency volatility.