A concentrated sell-off of UST triggered a death spiral in the algorithmic peg mechanism. LUNA's supply expanded from 350M to over 6 trillion coins trying to redeem UST at $1. The collapse cascaded through 3AC, Celsius, Voyager, and eventually FTX. Founder Do Kwon was arrested in Montenegro in 2023 and is awaiting extradition. The event permanently discredited algorithmic stablecoins.
attack·May 9, 2022
Terra/LUNA Collapse
Algorithmic stablecoin UST depegs. LUNA hyperinflates from $80 to fractions of a cent in 4 days. $40B evaporates.