💥 $40 Billion lost in a single day.
💣 Fortunes wiped out. Trust shattered.
Here’s the untold story of Terra (LUNA) and its dramatic fall.
💡 We’ve poured hours of research into this thread (for FREE).
📢 Please follow @Coinaute, ❤️ Like, comment, and ➡️ share this post! 🙏
Let’s dive in! 🌊
#CryptoCrash #MarketDownturn #Binance
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1️⃣ / Terra (LUNA): A Crypto Tragedy
Once a top project worth billions, Terra’s collapse is one of the most shocking moments in crypto history. 🚀➡️🌑
🔍 This thread explains:
📉 Why Terra’s algorithmic stablecoin model failed
⏳ How it all unraveled
🧠 Key lessons for investors.
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2️⃣ / What was Terra?
🌍 Terra aimed to revolutionize payments with its algorithmic stablecoin, UST.
Unlike traditional stablecoins backed by reserves (e.g., USDT, USDC), UST relied on a clever but risky relationship with its native token, LUNA.
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3️⃣ / The “Stable” Algorithm 🤔
💡 The idea:
1 UST = $1 worth of LUNA 🔁
Burn 🔥 LUNA to mint UST (and vice versa) to keep UST stable.
⚠️ But this system had a fatal flaw: under pressure, it could trigger a death spiral.
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4️⃣ / The Domino Effect Begins 🃏
In May 2022, cracks appeared:
📉 UST lost its $1 peg after massive withdrawals from Anchor, a DeFi platform offering 20% yields on UST deposits.
🚩 Anchor held 70% of UST’s supply, so the sell-off hit hard.
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5️⃣ / The Death Spiral 💔
🐂 Investors rushed to dump UST as its value dropped below $1.
🚨 The peg mechanism kicked in:
More LUNA was minted to stabilize UST.
But this flooded the market, tanking LUNA’s price 📉.
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6️⃣ / Total Collapse 🚨
💔 UST plunged to $0.10.
🔥 LUNA’s supply exploded from 350 million to 6.5 TRILLION 🤯.
💸 LUNA’s price crashed from $80+ to nearly $0.0001 in DAYS.
Major exchanges delisted both tokens. 💀 Terra’s $40B market cap evaporated.
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7️⃣ / Enter Do Kwon: The Face of Terra 👤
Known for his confidence and bold claims, founder Do Kwon was at the center of it all:
🎤 He dismissed critics, but as Terra imploded, his tone shifted to damage control.
⚠️ Emergency measures like minting trillions of LUNA and using Bitcoin reserves failed miserably.
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8️⃣ / Forking the Wreckage 🔄
Do Kwon proposed forking Terra to create a new LUNA token.
💔 But trust was shattered, and the community was divided.
💼 Lawsuits piled up, and regulators began scrutinizing Terra and its leadership.
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9️⃣ / Scandals Unveiled 🕵️
🚩 It was revealed that Do Kwon secretly controlled the burning wallet and had access to critical keys.
His actions played a major role in Terra’s collapse.
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🔟 / The Aftermath: Global Crackdown 🌐
The Terra debacle triggered:
📜 Global regulatory scrutiny
⚖️ Investigations into fraud and market manipulation
📉 Increased skepticism around algorithmic stablecoins.
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1️⃣1️⃣ / The Fall of Do Kwon ⚖️
After months on the run, Do Kwon was detained in Montenegro in March 2023.
He was caught with a forged passport and now faces fraud and manipulation charges in multiple countries.
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1️⃣2️⃣ / Lessons from the Collapse 📖
💡 Terra’s failure is a stark reminder of crypto’s risks:
1️⃣ Understand the projects you invest in.
2️⃣ Beware of unsustainable high yields.
3️⃣ Never invest more than you can afford to lose.
🌍 In this volatile world of crypto, even giants can fall.