Terra Luna Collapse (2022) event

Event · PageRank 0.0000

Overview

The Terra/LUNA collapse of May 2022 was one of the largest failures in crypto history. TerraUSD (UST) lost its dollar peg beginning May 7, 2022; because the peg was defended by minting LUNA rather than by reserves, the redemption rush hyperinflated LUNA's supply and its price fell from above $116 in April to under $30 by May 9, under $1 by May 11, and to essentially zero by May 13. UST bottomed around $0.10 before settling near $0.02, a roughly 98% loss for holders. Luna Foundation Guard deployed about $1.5 billion of capital on May 8 in a failed defence of the peg; total value destroyed exceeded $40 billion, and Do Kwon was later sentenced to 15 years in prison.

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Frequently asked questions

What dates did the Terra collapse unfold over?

UST began losing its peg on May 7, 2022. LUNA fell below $30 by May 9, below $1 by May 11, and to fractions of a cent by May 13, 2022.

Was anything done to defend the peg?

Yes. On May 8, 2022 the Luna Foundation Guard released about $1.5 billion in capital to add liquidity, and Do Kwon publicly urged holders to hold on, but the defence failed.

How much did holders lose?

UST fell about 98%, bottoming near $0.10 and settling around $0.02, while LUNA became essentially worthless. Total value destruction exceeded $40 billion.