Binance has delisted Bitcoin-margined LUNA perpetuals in response to Terra’s death spiral.
It’s also reduced the maximum leverage to 8x on USDT-margined LUNA perpetuals to 8x.
Changpeng Zhao has urged cryptocurrency followers to “respect the market, with a level of caution” and warned of the risks of algorithmic stablecoins.
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It comes after Binance CEO Changpeng Zhao issued a stark warning to “respect the market, with a level of caution.”
Binance Delists COIN-Margined LUNA Perpetuals
Binance is taking further steps to deal with the ongoing Terra crisis.
The leading cryptocurrency exchange posted an update Thursday announcing that it was delisting COIN-margined LUNA perpetual contracts. Binance Futures uses Bitcoin as the base asset for its perpetual contracts, meaning customers need to use Bitcoin to fund the margin on their LUNA trades. The exchange has also reduced the available leverage on its USDT-margined LUNA perpetuals, with the maximum now set at 8x. The measures took effect earlier this morning as the rest of the market continued its freefall.
The move comes after the exchange halted LUNA and UST withdrawals in response to UST losing its peg to the dollar. UST is an algorithmic stablecoin that operates in a close relationship with LUNA to maintain its peg, but intense selling pressure has meant that the ecosystem has reached a point of near collapse. The issues arose Saturday and the situation has worsened for Terra over the course of this week, with UST still trading short of the dollar at $0.60 and LUNA changing hands for pennies. LUNA is down another 98.5% today, trading just above $0.02.
We are in a new market, with many innovations. Algo stable coins is one of them. When they are hot, they are all the rage. When they drop, it can be a vicious circle. Some innovations will become successful, many won’t.
— CZ 🔶 Binance (@cz_binance) May 11, 2022
Binance’s CEO and most recognizable figure, Changpeng Zhao, also weighed in on what’s been described as one of crypto’s greatest black swan moments. The popular entrepreneur posted a tweet storm early Thursday reminding his followers of the risks associated with the cryptocurrency market. “We need to respect the market, with a level of caution too. It goes up and down in cycles. And especially the fact that it doesn’t always make sense,” he wrote, before taking a shot at algorithmic stablecoins.
“We are in a new market, with many innovations. Algo stable coins is one of them. When they are hot, they are all the rage. When they drop, it can be a vicious circle. Some innovations will become successful, many won’t,” he wrote.
Terraform Labs has said it will introduce a series of “emergency” measures to stop the ecosystem from falling apart. After the last few days, Terra will need a significant overhaul to have a shot at a comeback.
Update: Since this morning’s announcement, Binance has said that it will delist its LUNAUSDT perpetual contracts if the price falls below $0.005. It’s also launched LUNABUSD perpetual contracts with a tick size of 0.00001.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
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