CandleFocus TerraUSD Collapse: Highlighting The Risks of Algorithmic Stablecoins
2024-10-27
Author: Content Editor
The LUNA crash a few years ago wiped out $60 billion from the market's value and exposed many crypto users to significant losses. LUNA, which was backed by the Terra blockchain protocol and payment platform, relied on algorithmic stability instead of physical assets. However, the withdrawal of over $2 billion in UST from the Anchor Protocol triggered a de-pegging of the stablecoin, causing the price to crash. This led to a selloff of LUNA and subsequent delisting from crypto exchanges, resulting in a $60 billion loss and legal implications for involved parties. The incident serves as a lesson about the risks of algorithmic stablecoins and the allure of high yields.
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