The people who shorted 😋🤑

The dramatic crash of LUNA Classic (LUNC) (previously Terra LUNA) from over $119 to $0.00001 in May 2022 was one of the most catastrophic events in cryptocurrency history. Here’s a detailed explanation of what happened:
1. UST Stablecoin Depegging
UST was an algorithmic stablecoin designed to maintain a value of $1, backed by LUNA through a mint-and-burn mechanism.
In May 2022, UST started to lose its $1 peg due to large-scale withdrawals and market manipulation.
As UST fell below $1, the system minted excessive LUNA tokens to stabilize UST, increasing the supply exponentially
2. Hyperinflation of LUNA
To maintain UST’s peg, the protocol printed trillions of LUNA tokens in a short period
The excessive supply caused massive dilution of LUNA’s value, leading to a crash from $119 to near-zero
3. Panic Selling
The crash triggered panic selling by investors
The blockchain’s instability further fueled fear, causing a market-wide selloff
4. Loss of Confidence
The collapse destroyed trust in both UST and LUNA, with investors and institutions questioning the algorithmic stablecoin model.
This led to a liquidity crisis, as no one wanted to hold LUNA or UST.
5. Market Exploitation
Some believe the crash was partly due to coordinated attacks by large players who shorted LUNA and depegged UST for profit.
Aftermath:
The Terra blockchain was rebranded, and LUNA Classic (LUNC) emerged as the original token.
A new Terra blockchain was launched with LUNA 2.0, but the ecosystem has struggled to regain investor trust.
industr
The LUNA crash served as a cautionary tale about the risks of algorithmic stablecoins and poor economic models in the crypto industry
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