Terra/LUNA was a promising stablecoin platform It collapsed, wiping $40 billion from its market cap It sent ripples through the ecosystem which are still felt today In May 2022, two and a half years ago, Terra/LUNA was one of the most promising cryptocurrency projects in the space. But its algorithmic stablecoin, TerraUSD (UST), had a fatal flaw. Pair that with a market freakout, and the whole thing imploded. Billions were lost, trust broken, and the crypto space still feels the sting . Today, we’re looking back at what Terra/LUNA was, how it collapsed, and the fallout that followed. What was Terra/LUNA? Terra (LUNA) was a blockchain platform that sought to create a stable digital economy using its algorithmic stablecoin, TerraUSD (UST), which was designed to hold a 1:1 peg to the US dollar. The platform used a unique mechanism where UST’s price stability was maintained through the minting and burning of LUNA, its native token, in response to market fluctuations. If UST dipped below $1, users could burn it and create LUNA. This reduced UST supply, pushing its price back to $1. If UST climbed above $1, users could burn LUNA, increasing UST suppl… The post The Terra/LUNA Implosion: Billions Lost, Trust Broken, Lessons Learned appeared first on Coin Edition .
