I was there, it was bad, the fall had just entered the crypto market

But do we *really understand* what happened that year? 😅 Let’s break it down and make it simple—here’s all you need to know.

When Did Luna Collapse? 📅

The *Luna crash* happened in *May 2022*. It was a huge event in the crypto world that caused a lot of chaos and shook investor confidence. 😱

Why Did Luna Collapse? 🤔

So, why did this *massive collapse* happen? It all started with *TerraUSD (UST)*, which was supposed to be a *stablecoin*—a cryptocurrency designed to maintain a 1:1 peg with the US dollar. 🪙➡️💵

Here’s where things went wrong:
- *UST was an algorithmic stablecoin*, meaning its value was meant to stay stable by being *backed by Luna* (another token). Essentially, for every UST minted, there were Luna tokens burned (and vice versa).
- When people started *losing confidence* in UST and began *selling it off*, the system tried to keep the peg intact by printing more Luna tokens, which caused *hyperinflation* of Luna’s supply. 🏃‍♂️💨
- The *more Luna tokens printed*, the *less valuable* they became. This created a *downward spiral*, and both UST and Luna lost *all their value*. 📉

What Really Happened? 😳
- As the price of *Luna dropped dramatically*, *UST couldn’t maintain its $1 peg*, leading to a *panic sell-off* from investors. 🏃‍♀️💨
- The *UST collapse* caused more people to sell Luna, and since Luna was used to stabilize UST, this created an even worse feedback loop. The value of both *UST and Luna crashed to near-zero*, wiping out *billions of dollars* in value in just a matter of days. 💥💸

To put it simply, Luna's entire model was built on a *fragile foundation*: it relied on people’s faith in the stability of UST, but when that faith cracked, everything fell apart. 😬

Key Takeaways 📚:
- *Date*: May 2022.
- *What Happened*: Luna collapsed due to the failure of *UST*, an algorithmic stablecoin, which lost its peg and caused hyperinflation of Luna.
- *Why*: The system was unsustainable, and when confidence in UST dropped, it triggered a chain reaction that destroyed both UST and Luna’s value. 💔

It was a big lesson in *trusting the fundamentals* behind a project—just because something looks solid doesn’t mean it can’t crash in an instant.

So, there you have it—*Luna* went from a top-tier crypto to zero in a blink of an eye, and it all started with a *stablecoin fail*. 🧐

$LUNA

$LUNC

$USTC

#LUNA✅
#Write2Earn