Unlike tether, UST was not backed by a reserve of fiat cash. Instead, it relied on some intricate engineering to maintain price stability by destroying and creating UST and its sister token luna. The promise of 20% savings rates from Anchor, Terra's flagship lending platform, enticed investors, despite the fact that many investors believed the rate was unsustainable.

Do Kwon, the founder of Terra, had amassed billions of dollars in bitcoin and other tokens through his Luna Foundation Guard fund, but the assets were nearly exhausted in a vain attempt to save UST.

Nonetheless, the UST panic has increased attention to other stablecoins, namely tether.

Regulators and economists have long questioned whether Tether's holdings are sufficient to support the stablecoin's ostensible peg to the dollar.

Following a settlement with the New York attorney general, the corporation acknowledged that tether was backed one-to-one by dollars in a bank account, but that it was also utilizing other assets as collateral, including commercial paper (short-term corporate debt) and even digital tokens.

Tether announced last week that it had cut its commercial paper holdings and increased its holdings of US Treasury notes. The British Virgin Islands-based company revealed for the first time that it also carries foreign government debt. Tether did not elaborate on the source of its funds, but said say it is doing a more thorough examination of its reserves.

=====