🪙 “But it’s a dollar…” - How My Friend Lost $20,000 on UST 💸
Back in 2022, my friend was excitedly telling me about TerraUSD (UST). He was convinced he had found the holy grail of passive income.
“You get 20% annually. Fixed. Stable. And come on... it’s a dollar. What could possibly go wrong?”
🎯 UST was supposed to be a stablecoin, pegged 1:1 to the US dollar. Through the Anchor Protocol, it promised nearly 20% annual yield. For many, it sounded too good to pass up. My friend included.
💼 He went all in with his savings - $20,000.
🧨 But UST wasn’t a typical stablecoin. It was algorithmic and its peg relied on a complex mechanism with another token: LUNA. When pressure hit the ecosystem, the spiral began:
UST lost its dollar peg.
LUNA hyperinflated and collapsed.
Anchor stopped paying out its promised yields.
And eventually… everything went up in smoke.
📉 The result? My friend was left holding a few worthless tokens. From a solid $20,000, almost nothing remained.
🔍 Today, he understands:
“Stability” in algorithmic stablecoins isn’t guaranteed.
20% yield with no risk is usually a trap.
And saying “but it’s a dollar” can be dangerously naive.