Investors lost $40 billion in just one day.
Here’s the untold story of what happened

We put a lot of research and work FOR FREE into this thread before reading it.

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1 / The Terra (LUNA) collapse stands as one of the biggest disasters in crypto history. Once a top project with billions in market value, Terra's downfall sent shockwaves across the industry, wiping out fortunes and shattering trust.
In this thread, I’ll break down how Terra’s ambitious algorithmic stablecoin model failed, the events that led to its collapse, and the critical lessons every crypto investor should learn from this fiasco.
Let’s dive into the story of Terra (LUNA) and its dramatic fall
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2 / Terra was a blockchain project that aimed to revolutionize payments with its algorithmic stablecoin, UST.
Unlike traditional stablecoins backed by reserves like USDT or USDC, UST was designed to maintain its $1 peg through a complex relationship with Terra’s native token, LUNA.
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3 / The idea was simple: users could always exchange 1 UST for $1 worth of LUNA, and vice versa, with LUNA being burned to mint UST and stabilize its price.
But as we would soon see, the algorithmic model had critical vulnerabilities: when stress hit the system, the very mechanism meant to stabilize UST would turn into a death spiral.

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4 / In May 2022, UST began to lose its $1 peg after significant withdrawals from Anchor, a DeFi platform that was crucial to Terra’s ecosystem.
Anchor offered a high annual yield of nearly 20% on UST deposits, attracting a huge portion of UST—over 70% of the total supply.

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5 / When concerns about sustainability arose, users rushed to withdraw their funds, creating sudden selling pressure on UST.
As UST's value dipped below $1, the mechanism to restore the peg involved minting more LUNA, but this only flooded the market and crashed LUNA’s price.
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6 / The crisis accelerated rapidly. UST lost its $1 peg entirely, dropping to as low as $0.10.
Meanwhile, LUNA's supply soared from around 350 million tokens to over 6.5 trillion in a desperate attempt to restore UST's value. This caused LUNA’s price to plummet from over $80 to nearly $0.0001 within days.
Major exchanges began delisting LUNA and UST due to their extreme volatility, and Terra’s market cap, which had been around $40 billion, evaporated almost overnight.

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7 / As the Terra collapse unfolded, all eyes turned to Do Kwon, the project’s outspoken founder. Known for his confidence and bold claims, Do Kwon had been a vocal advocate for Terra’s success, often dismissing critics.
But as UST and LUNA crashed, his tone shifted from defiance to damage control.
The team scrambled to restore UST’s peg, implementing emergency measures like minting trillions of LUNA and using billions in Bitcoin reserves to try and stabilize the situation. However, these efforts were too little, too late, and the downward spiral continued.

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8 / Do Kwon announced plans for a "recovery" by proposing to fork the Terra blockchain and launch a new LUNA token, but confidence in the project had already been shattered.
The community was divided, and many investors felt betrayed. Lawsuits and investigations into Terra’s collapse soon followed, with Do Kwon facing growing legal scrutiny and calls for accountability.

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9 / Controversy grew as it emerged that, despite his earlier denial on Twitter, Do Kwon did control the burning wallet and had access to the keys.
His involvement in managing LUNA’s supply played a crucial role in the ecosystem's collapse.

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10 / The Terra collapse caught regulators' attention worldwide, sparking concerns about investor protection and leading to calls for stricter crypto regulations.
Authorities began scrutinizing algorithmic stablecoins and DeFi projects, with some countries launching investigations into Terra for potential fraud and market manipulation.
Lawsuits against Terra, Do Kwon, and others quickly followed. South Korean prosecutors issued an arrest warrant for Do Kwon, making him a key figure in the legal fallout.
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11 / After months on the run and facing multiple legal challenges, Do Kwon was finally detained in March 2023.
Authorities caught up with him in Montenegro, where he was found using a forged passport. His detention marked a significant turn in the fallout from the Terra collapse, as international authorities, including South Korea and the United States, had been actively pursuing him for his role in the disaster.
The arrest intensified the scrutiny on Kwon, with legal proceedings focusing on allegations of fraud, market manipulation, and misleading investors.

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12 / The Terra collapse exposed the risks of algorithmic stablecoins and high-yield DeFi projects. It showed how quickly things can fall apart when stability is uncertain.
The key takeaway: always understand the risks before investing in crypto.
In such a volatile space, even major projects can collapse. Be cautious, never invest more than you can afford to lose, and always do your research.
We put a lot of research and work FOR FREE into this thread before reading it.

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In the past five days, whales have been withdrawing Chainlink (LINK) from Binance and accumulating it in self-custodied wallets. The withdrawals were sent to newly created wallets, with a list of 30 addresses with whale holdings. 

Chainlink (LINK) has seen significant withdrawals from Binance, as the funds are sent to a list of 30 newly created wallets. The addresses now hold $34.1M in notional value, or 1.37M LINK. The biggest wallet holds more than 151K LINK, and the smallest withdrawal is for around 5K LINK. 

The rationale for the recent withdrawals remains unknown, as LINK is both used for speculative trading and as a utility token. LINK can also be staked for a small passive income. Holding LINK in a self-custodied wallet also allows for DeFi interactions.

Some of the LINK whale activity may be targeted at buying price dips and making use of the short-term volatility. However, despite the loyal holding, LINK is yet to break out to its previous peak, still retaining the range-bound pattern of the bear market.

Other use cases may include new forms of staking, including liquid staking with additional rewards. Some of the free LINK tokens have been deposited to the Stake.Link priority pool.

LINK is no stranger to whale activity, and this accumulation is seen as a potential sign for positive price action. LINK has also seen recent whale activity where one closely watched an address used LINK for short-term trades to realize gains of over $200K. 

The whale, known as pleven.eth, uses LINK for buying the dip and selling higher, making use of the token’s deep liquidity. That whale’s approach is to use decentralized services to flip between LINK and USDT, realizing gains for price swings happening within a day or even hours. 

The whale activity uses spot trades, while total LINK open interest has diminished from its 2024 peak. Long positions are now above 75%, potentially attackable with a downward price move. 

LINK continues to trade and consolidate in its higher price range, after briefly getting closer to $30. For now, the asset has not broken above that level, returning to $24.20. LINK is also a bit harder to pump, since only 15% of all trading activity remains on Binance.

LINK trades with a slight premium on Bithumb, as its Korean won pair has the equivalent of $25.39. However, not all international traders have a right to trade in South Korea, making this arbitrage more difficult. 

Chainlink focuses on financial services, cross-chain partnerships

Chainlink continues to behave as a utility project, avoiding direct hyping of its token. The platform is ranked at position #6 based on GitHub updates, making it one of the most actively developed projects. 

In the past months, Chainlink started adding more partnerships to its CCIP cross-chain service. After replacing Ronin’s bridge, Chainlink also took over the bridging of Neiro on Ethereum (NEIRO), as well as ApusCoin (APU). While those memes are relatively minor, they still mark a shift to more use cases for Chainlink. 

Chainlink still secures more than 53% of DeFi value, or over $36.79B. The oracle provider has partnered with 407 crypto projects, excluding experimental use cases in mainstream financial organizations. LINK is also found in the wallet of the Trump-backed DeFi lending protocol, World Liberty Financial, retaining more than 78K tokens since the initial purchase.

The Chainlink platform also built up a cult of long-term loyal holders, which appear to support the token even during drawdowns. For that reason, whale accumulation has been noticed during previous bull markets, potentially signaling a price breakout.

In the past few weeks, whales with more than 100K LINK in their wallets also shifted to more active accumulation. Small-scale retail users are selling, changing the token profile of the asset. LINK is 100% unlocked, and any shifts in the supply are happening on the open market. Around 50% of the supply is locked with node operators, limiting the freely available LINK for DEX activities and utility purposes.  

CCIP now offers cross-chain linking to 13 total blockchains, on track to replace other types of bridges and become a monopolist for cross-chain transfers. 

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