says that UST crash highlights dangers from unbacked DeFi stablecoins.

The TerraUSD (UST), token crashed to $0. 61 crashed to $0.0 on Monday after it was massively de-pegged at $1. This move came at the same moment as the wider crypto market was bled, and a sharp fall in stocks.

UST moved up in the wake of a raft reintroduction of the peg by Luna Foundation Guard, which is the organization responsible for the UST treasury.

As the algorithmic token fell, the LFG deployed its $2.2 billion BTC reserves – a move likely to have helped stem the rot- with BTC price falling briefly below $30k and LUNA nosediving more than 50% to around $28.

UST is at risk as LUNA trades 50% in 24 hour

Tim Frost is the founder and CEO at Yield App. He believes the crash demonstrates the vulnerability of decentralized stablecoins.

“ A brutal start to the week has seen one of the market’s newest stars fall: UST. It slips 40% below the USD peg ,” Frost, just when we thought it was finally a stable, decentralized cryptocurrency.

UST has recovered to $0. 90 as BTC sees a slight recovery above $31.5k and Terra (LUNA) pares some of the losses to currently trade around $30. However, the LUNA/USD pair remains 50% below.

Frost thinks that LFG’s new selling around the DeFi token could indicate that LFG’s measures won’t be a long-term solution. More inbound pressure is therefore possible.

“This highlights how vulnerable decentralized stablecoins relying on theoretical pegs rather than hard cash are in an old-fashioned bank panic. When investors begin to rush for the doors, there is nothing anyone can do but join the stampede and take a huge loss ,”. The Yield App chief said.

Frost comments on the overall outlook for the crypto market. “There is now little doubt that we are in the middle of the most aggressive bear markets since 2018.”

,” Frost said.