Founded by Do Kwon and Daniel Shin in 2018 and released by Terraform Labs. LUNAwas a cryptocurrency developed on the Terra blockchain.

TerraUSD (UST) LUNA, which is also linked to an algorithmic stable coin called LUNA, quickly became popular among investors.

While stablecoins generally aim to provide investors with a safe haven by providing price stability, the situation for TerraUSD was somewhat different.

TerraUSD (UST), unlike other stable coins, is not backed by real assets, but fully It was backed by the LUNA token.

So the way the IHR works is a bit It was based on the balance between supply and demand.

Investors Can generate UST by burning LUNA tokens And in this way, LUNA was expected to gain value.

Although things went well for a while, the underlying risks to the system were ignored.

The dollar rate is fixed, especially in the TerraUSD (UST) section. protection with algorithms It created a great vulnerability.

If in May 2022 The crypto world was shocked.

Because investors suddenly to withdraw a large amount of UST had started and this sudden move caused UST to lose its dollar peg.

UST, which should suddenly be at the same level as the dollar fall to a lower level than the dollar It caused investors to panic about the selling, causing a chain effect.

This led to the overproduction of LUNA tokens as a precaution, and that terrible scenario occurred.

Production of large quantities of LUNA due to oversupply The value of LUNA is rapidly decreasing. led.

So LUNA, which was once worth $116, Within a few days it became almost worthless.

This crash is for investors who invested in LUNA and UST a major disaster It meant…

The collapse of LUNA deeply affected not only the Terra ecosystem, but also the entire cryptocurrency market.

With the loss of value of major cryptocurrencies such as Bitcoin, in total 300 billion dollars an entity has been deleted…

So many investors lost all his savings and found itself in a very difficult financial situation.

Do Kwon disappeared after the collapse. pretty much red bulletin even removed.

Kwon, who was caught in Montenegro with a fake passport, was extradited to the United States and charged by the Securities and Exchange Commission (SEC) with misleading investors and by securities fraud he accused.

The accusations are that Kwon and his team failed to maintain the UST’s dollar peg. knowingly providing false information to investors People thought he was cheating on them.

As a result, LUNA’s collapse worried investors How big the risks can be behind big promises He showed me a painful lesson.

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