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As the UST falls further from the dollar peg, the cryptocurrency luna falls to zero.

• Luna, the cryptocurrency linked to TerraUSD, or UST, is now worth $0, as the stablecoin's $1 peg has been drastically reduced.
• In the last 24 hours, the Terra network has stopped processing transactions twice.
• UST and luna have been temporarily delisted from Binance, the world's largest cryptocurrency exchange.

The contentious stablecoin TerraUSD's sister token is now practically worthless.

Luna fell to $0 on Friday, according to data from CoinGecko, a shocking drop for a cryptocurrency that had formerly been worth more than $100.

The failure of contentious stablecoin Terra triggered a crypto market crisis, wiping out billions of dollars in value in a single day.

The TerraUSD, or UST, is designed to be pegged to the US dollar one-to-one. According to CoinGecko data, UST has lost its peg and was trading at roughly 12 cents on Friday.

Despite the continuous woes of stablecoin TerraUSD, which has sparked fear in the crypto market, Bitcoin rose above $30,000 on Friday. Investors were presumably relieved to see that tether, the world's largest stablecoin, has regained its dollar peg after briefly falling below $1.

The world's largest cryptocurrency bitcoin was last trading at roughly $30,046.85, according to Coin Metrics data, up 5.3 percent from levels not seen since late 2020 earlier this week.

The digital currency, though, is still down more than 15% for the week.

What is UST?

Luna is tied to UST. UST is an algorithmic stablecoin, which means its $1 peg is expected to be controlled by code. That distinguishes it from other stablecoins like tether and USDC, which are backed by real-world assets like bonds. UST does not have any real-world reserves.

To guarantee price stability, the UST algorithm uses a complicated mechanism of minting and burning tokens. To keep the dollar peg, a UST token is generated by destroying some of the linked cryptocurrency luna.

However, UST has been put to the test by high market volatility, and it has been unable to maintain the peg.

The Terra blockchain, which underlies UST and luna, has stopped processing transactions twice in less than 24 hours, adding to the complexities.

Meanwhile, on Friday, Binance, the world's largest cryptocurrency exchange, delisted UST and luna.

While Binance CEO Changpeng Zhao stated that the company "always seeks to stay neutral," he added that "this time we will break that norm."

Trading in UST and luna have resumed on Binance as of 10:30 a.m. ET.

It comes after Terra declared that it will resume the verification of new blockchain transactions but would no longer accept direct network transfers. Instead, users are encouraged to use alternative channels.

Aside from the UST saga, crypto markets have been buffeted by a slew of other headwinds, including increasing inflation and interest rate hikes, which have triggered a sell-off in global stock markets, which has filtered down to crypto markets. The price of cryptocurrencies has been linked to stock market moves.

"The Luna/UST crisis has severely harmed market trust." Most cryptocurrencies have lost more than half of their value. "When you combine this with concerns about global inflation and growth, it's not looking good for crypto," said Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno.

Even the significant bitcoin recovery may not be long-term.

“In such markets, its normal to see bounces amounting to 10-30 percent. These are often bear market rebounds, with earlier support levels acting as resistance," Ayyar explained.