Painful to Watch - UST and LUNA

https://marrythaigirlsingapore.blogspot.com/2022/05/tough-days-for-crypto-market.html

Still find it incredible this happened in less than a week's time. I don't want to use any negative words or phrase anything negative until the Terra team and its community says it's over.

Personally I'm not invested in UST or LUNA, used to hold some LUNA but sold a few months ago.

3 days ago when I blogged about it I thought nothing serious because it's not the first time any stablecoin depegged, even the likes of rock solid stablecoins like USDC and BUSD depegged sometimes.

Boy was I wrong and things escalated too fast.

As of now, UST is trading at $0.0951 and LUNA is trading at $0.00000953. Really painful to see this, don't really want to imagine how many retail investors got wiped out.

When this happened, there were conspiracy theories about UST getting attacked by dumping UST and then shorting it and Terra had to sell Bitcoins at a huge loss to repeg UST. The latter part is definitely true but for the attack, I don't know, as long as not proven, a theory is just a theory.

I'm more inclined to think that this is a case where fear led to panic, which led to chaos, and to hopelessness.

UST depegged, people panic sold, and Bitcoin happen to fall 11.60% which made things even worse, fear on top of fear means mass panic, especially when people saw a $0.744 UST, that already set the stage for a mass exodus of liquidity, people will get out in the next pump just to be safe, especially the big money.

In short, what happened was a bank run, caused by fear and panic, and Terra didn't have the reserve to back their UST, so apparently they didn't plan for this scenario.

I really hope all stablecoins learn from this and put in place measures for the worst case scenario, people tend to only plan for the best and completely ignore the worse that can happen, that's why I always ask, "What's the worst that can happen?"


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