So, every $UST can be minted by anyone by swapping it on native market swap on Terra Station by selling your $LUNA for $UST. By doing so, you burned your $LUNA and its equivalent value of $UST will be minted. Algo stablecoins was quite bad in the past as example, IRON Bank. One reason why it fails because there was no incentive in holding $TITAN thus massive selling pressure was created. However in Terra, $LUNA and $UST works in tandem to drive each other.

So, demand for $UST will reduces $LUNA supply because an equivalent amount of $LUNA needed to be burned to mint $UST. As per graph above, we can see that after the burning of $LUNA from community treasury and from other traders.

The spike in of $LUNA supply from 677M to 728M on Nov 14th was because of the proposal 133 and 134 which is to burn $LUNA from community treasury and we can see $UST mcap went to 5B but this did not affect $LUNA price action as much because the burned $LUNA was not from circulating supply. However, from 25th November we can see that over 1M $LUNA burned by retail users and this rallies the price to ATH at over $70 because this time, the $LUNA burned was from circulating supply.

So, this is just simple supply and demand. $LUNA tokenomics is very genius and imagine if more protocols like Kash, Alice etc which enables users to buy goods using $UST thus creating very strong demand for $UST and plummets $LUNA supply and that will take $LUNA to the moon.