Scam and Risks in Cryptocurrency: The Story of LUNA and LUNC

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The LUNA project and its associated token, LUNC (Terra Classic), became symbols of the crypto crisis, showing how quickly ambitious projects can collapse. The story of LUNA illustrates the risks in crypto investments and mistakes to avoid.

📊 What are LUNA and Terra?

LUNA was tied to the Terra platform—an ecosystem for creating stablecoins. The main token, UST, was pegged to the dollar through algorithms that regulated its price by issuing or burning LUNA.

⚠️ What Went Wrong?

1. 🔗 The Problem with Algorithmic Pegging

Instead of being backed by real reserves, UST was supported by algorithms and LUNA. In times of mass selling, the system failed to maintain the peg, leading to a steep drop in value.

2. 📉 Panic and Hyperinflation

The sell-off of UST led to a massive issuance of LUNA, causing it to lose nearly all value. Investors incurred huge losses, and the project’s reputation was severely damaged.

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