• Dapps:16.23K
  • Blockchains:78
  • Active users:66.47M
  • 30d volume:$303.26B
  • 30d transactions:$879.24M

The Terra/LUNA Unraveling: Billions Vanished and Its Implications for Crypto

user avatar

by Giorgi Kostiuk

3 months ago


We explore the history of Terra/LUNA, its collapse, and the effects it brought to the crypto space.

What was Terra/LUNA?

Terra (LUNA) was a blockchain platform aimed at creating a stable digital economy using its algorithmic stablecoin TerraUSD (UST), which was designed to maintain a 1:1 peg to the US dollar. The platform employed a unique mechanism where UST's price stability was sustained through minting and burning LUNA, its native token, in response to market fluctuations.

How did the collapse happen?

In May 2022, amid a market panic, a fatal flaw in TerraUSD's (UST) mechanism was exposed. As UST prices fell below $1, users started withdrawing UST and creating LUNA, leading to an oversupply of LUNA and its devaluation, eventually causing the entire system to implode.

Billions were lost, trust broken, and the crypto space still feels the sting.

Aftermath of the collapse

The fall of Terra/LUNA significantly impacted the cryptocurrency industry, wiping out about $40 billion of market value and affecting numerous investors. This collapse highlighted the risks associated with algorithmic stablecoins and prompted many to reevaluate the reliability of such mechanisms.

The collapse of Terra/LUNA marked a milestone event in the history of the crypto industry, reminding of the importance of thoroughly understanding the mechanisms of financial systems before investment.

0

Share

Other news

Illinois vs Coinbase: Continues Battle Over Staking Regulation

Illinois pursues its lawsuit against Coinbase for alleged staking violations, questioning state regulation of cryptocurrencies.

user avatarGiorgi Kostiuk

a few seconds ago

Justin Sun's Allegations Against FDT: $500 Million Fraud

Justin Sun claims FDT embezzled $500 million, a situation that may lead to increased regulatory scrutiny.

user avatarGiorgi Kostiuk

9 minutes ago

Bullish Outlook from Bank of America: Analysis of GBPCHF

Bank of America suggests a bullish opportunity in GBPCHF, analyzing economic and technical factors. Traders should stay informed.

user avatarGiorgi Kostiuk

9 minutes ago

Current XRP Decline: What Investors Need to Know

XRP shows a 7.97% drop in the last 24 hours. This article analyzes the current situation and key support levels.

user avatarGiorgi Kostiuk

10 minutes ago

MAGACOINFINANCE: Growing Interest in a New Asset in the Crypto Space

MAGACOINFINANCE attracts attention from traders and investors due to successful pre-sale and potential returns.

user avatarGiorgi Kostiuk

22 minutes ago

ParaSwap Becomes Velora with Delta v2.5 Update

ParaSwap introduces the Delta v2.5 update and rebranding to Velora, focusing on simplifying the DeFi trading experience.

user avatarGiorgi Kostiuk

30 minutes ago

dapp expert logo
© 2020-2025. DappExpert. All rights reserved.
© 2020-2025. DappExpert. All rights reserved.

Important disclaimer: The information presented on the Dapp.Expert portal is intended solely for informational purposes and does not constitute an investment recommendation or a guide to action in the field of cryptocurrencies. The Dapp.Expert team is not responsible for any potential losses or missed profits associated with the use of materials published on the site. Before making investment decisions in cryptocurrencies, we recommend consulting a qualified financial advisor.