SUDDEN DROP👽🚀Let's talk about what happened to LUNC in 2022?Luna Classic (LUNC), formerly known as Terra
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(LUNA), experienced a dramatic crash in May 2022 due to a series of events primarily related to its stablecoin, TerraUSD (UST).So what exactly happened?1. Stablecoin Mechanism🚂~UST: TerraUSD was an algorithmic stablecoin meant to maintain a 1:1 peg with the US dollar. ~LUNA: LUNA was used to maintain UST's peg through a burn-and-mint mechanism. When UST's price fell below $1, it could be exchanged for $1 worth of LUNA, and vice versa. 2. Market panic🫨~In May 2022, UST lost its peg to the dollar, dropping significantly below $1.~Investors panicked and started mass selling both UST and LUNA. 3. Hyperinflation🤑~To restore UST's peg, a large amount of LUNA was minted.~The sudden and excessive minting led to hyperinflation, causing LUNA's price to plummet. 4. Death Spiral 😵🌀~As more LUNA was created, its value decreased rapidly.~The plummeting value of LUNA undermined confidence in both LUNA and UST.~This triggered a feedback loop, further devaluing both tokens.
