DESCRIPTION: Recent crash in the value of LUNA and UST has taken a toll on the mental health of the percentage of the world that invested in it.
LUNA CRASH AND ITS EFFECT ON INVESTORS AND USERS ALIKE
[TL;DR]
Last week, the world was exposed to the harsh reality of the side effects of centralized cryptocurrencies. LUNA, a cryptocurrency, and its pegged stablecoin UST have now crashed rapidly with loss to all investors, both small and big. The creator, Do Kwon has apologized and proposed a “revival plan” but despite this ray of hope, the future has never looked gloomier for crypto investors… Learn more in the body of the article.
KEYWORDS: LUNA, UST, LUNA crash, Cryptocurrency, centralized tokens, mental health, loss, bullish markets, crypto volatility.
On May 8th,2022, the crypto universe experienced bullish markets and insane volatility of tokens. Major losers were those who invested in Luna. Luna Foundation had earlier bought $1.5 billion worth of BTC to shield against such events, unfortunately, it was not as rosy as the investors and council had planned. LUNA and its stable coin on the Terra ecosystem plummeted far beneath $1 and signaled a great loss for investors. The foundation’s $1.5 billion worth of BTC (about 80,000 BTC at the time) also took a great fall to about $10 million in their reserves.
WHAT PLANS WERE MADE TO SECURE THE NETWORK, LUNA, AND THE STABLECOIN UST?
Do Kwon, creator of the Terra ecosystem and LFG ( LUNA Foundation Guard) had plans to prevent LUNA and UST from crashing so low and even came up with a “revival plan” soon after the crash.
The foundation had a plan to buy $10 billion worth of BTC to secure and act as a backing for LUNA and prevent UST from falling below the $1 peg. LFG had only achieved about one-third ($1.5 billion) of that dream when all hell broke loose. Do Kwon in a comment said that LFG would continue buying BTC when UST passed the $1 peg.
The foundation started trying to solve the problem by converting its reserves to UST, it swapped its reserves with a counterparty to enable them to enter large trades with the foundation on short notice. When the price of UST continued to decline and was below its $1 peg TFL (Terraform labs) executed exchange trades on behalf of the foundation in a last ditch effort to defend the peg. It staked UST across a range of validators to protect against governance attacks. At the end of the transactions, the foundation’s BTC reserves were greatly depleted. Find the details here.
HOW DID THE CRASH AFFECT INVESTORS AND USERS?
Major investors like the CEO of Binance, Changpeng Zhao lost $1.6 billion worth of investments, yet smaller users who seemed to invest a lot of their means put in more than they could afford to lose and didn’t take the dip so casually even shared suicidal thoughts on Twitter.
A user tweeted “I lost all my money in crypto again, this time I’m going to suicide. F**k LUNA, UST, BTC, and all the tokens/coins. I feel very depressed/broken.” God help me with this, he pleaded. Another user tweeted “Lunaterra. I lost my 2years income. LUNA has made me a street beggar. I am planning to commit suicide. Bye world” the user posted. While some users were absolutely devastated others showed support for the ecosystem saying it will recover and a planned attack means they are doing something very well. “Phoenix REBORN from ashes. We support LUNA” one tweeted in an animated show of support.
IS THERE ANY HOPE FOR LUNAtics?
Hope, Despair signpost/ Pixabay
After the dreadful incident with the Terra tokens, Do Kwon came up with a “revival plan” to move Terra to a new network while the old network becomes “Terra classic” and its native token “LUNA classic–$LUNC”. He said, “the Terra chain as it currently exists should be forked into a new chain without algorithmic stablecoins called “Terra” (token Luna – $LUNA), and the old chain be called “Terra Classic” (token Luna Classic – $LUNC). Both Chains will coexist.” New $LUNA will be airdropped to $LUNC stakers, holders, residual UST holders, and essential app developers. Also, Terraform labs’ wallet will be removed from the airdrop, making Terra a fully community-owned chain. Many have shown distrust in the process, but protocols and developers who support the project have agreed to become validators.
While there are LUNAtics with a flare of Hope in their tweets, others are dealing with financial heartbreaks and are on the verge of giving up. Although cryptocurrencies are volatile and risky they remain one of the most liberalizing inventions of man.
RESEARCHED AND WRITTEN BY MOGBOLU THECAPSTONE.
JustCryptoWeekly 
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