LUNA and the UST stablecoin continue to plummet; LUNA dropped as low as $1, a ~97% slide in 24 hours, while UST dropped as low as $0.27, a ~60% fall in 24 hours

Quick Take — The price of Luna has dropped 82% in the last 24 hours. — Its related stablecoin UST has retreated …

The Block 2022-05-11 Tim Copeland

Context & Ripple Effects

UST had already broken its dollar peg, falling to $0.60 after the Luna Foundation Guard committed bitcoin reserves to support it. The further sell-off turned that rescue effort into an acute test of Terra’s linked-token design.

The immediate pressure was compounded by staked LUNA that holders could not readily sell, while the Luna Foundation Guard was reportedly pursuing new capital to shore up UST. Related coverage subsequently recorded LUNA’s decline to $0.01 and a broad pullback in DeFi value locked.

First-order effects

LUNA holders absorb a rapid loss of value, while UST users face a stablecoin trading far below its intended dollar peg.
The Luna Foundation Guard must manage the UST defense amid a collapsing LUNA token, as locked stakers have fewer immediate exit options.

Second-order effects

The reported financing effort to support UST becomes harder to execute on favorable terms when prospective backers are offered LUNA at a discount during the sell-off.
The failure radiates beyond Terra: related coverage later shows total value locked across DeFi falling sharply after the UST and LUNA collapse.

Third-order effects

Terra’s collapse makes the durability of a stablecoin’s peg inseparable from the liquidity and confidence in its supporting token and rescue reserves.
Terraform Labs’ later blockchain reboot and the swift decline in newly minted LUNA show that replacing the token alone did not restore market confidence.

The trend: The Terra episode is a data point in DeFi’s shift from growth driven by token incentives toward scrutiny of stablecoin support mechanisms, liquidity, and exit conditions.

Discussion

@stablekwon @stablekwon on x
1/ Dear Terra Community:
@johnbrownlow John Brownlow on x
The Luna reddit forum is full of suicidal posts. Reminder that the crypto space may be zero sum (dollars in = dollars out) in financial terms, but not human terms. https://twitter.com/...
@galois_capital @galois_capital on x
The Sacking of Crypto Carthage
@katie_martin_fx Katie Martin on x
dry from UBS on crypto: “Case for institutional adoption seems to be receding by the day, with the space affording no safe-haven and only negative diversification via idiosyncratic risks.”
@laurashin Laura Shin on x
A lot of big name crypto investors with egg on their faces. Their backers are a Who's Who of crypto VC firms 🫣 This will definitely have big ramifications https://twitter.com/...
@thestalwart Joe Weisenthal on x
In today's newsletter, I wrote about how just because people want a decentralized stablecoin to exist, it doesn't mean it's actually possible https://www.bloomberg.com/... https://twitter.com/...
@stablekwon @stablekwon on x
7/ First, we endorse the community proposal 1164 to Increase basepool from 50M to 100M SDR *) Decrease PoolRecoveryBlock from 36 to 18 This will increase minting capacity from $293M to ~$1200M. https://station.terra.money/ ... This should allow the system to absorb the UST more q…
@davidgerard @davidgerard on x
six months ago: the guy from Terra mocking the idea of *the precise attack that just happened* https://twitter.com/...
@terrabitespod @terrabitespod on x
We're here, still unsure of all the details, but finding it more and more convincing that this is a multi-level economic hitman attack. We're here, some of us hit with liquidations, feeling the pain of those in similar straits. 1/5
@fintechintern @fintechintern on x
@fintechfrank Update https://twitter.com/...
@stablekwon @stablekwon on x
4/ A review of the current situation: UST is currently trading at 50 cents, a significant deviation from its intended peg at $1.
@saylor Michael Saylor⚡️ on x
The #bitcoin price is set by those with more money and less knowledge than you. In time, they will get the knowledge and you will get the money.
@0xsisyphus @0xsisyphus on x
this price action resembles “degrossing” in trad markets (where levered hedge funds have to rapidly unwind positions and blanket sell everything)
@lawmaster Larry Cermak on x
This has been probably the craziest few days in crypto for me right after the covid crash. Absolute insanity happening. In the next few weeks, we will start finding out about the actual consequences of these few days.
@twobitidiot @twobitidiot on x
We just lost a $40 billion asset and it wasn't “too big to fail” so our overlords can pound sand on the “DeFi is a systemic risk to the financial system” garbage. I'll take a ruthless, anti-fragile system over a “safe” “well-regulated” one any day of the week.
@adamsinger Adam Singer on x
Crypto market contagion is real. And that was just one blow up. There's literally 1000s more
@bennetttomlin Bennett Tomlin on x
Pretty soon VCs from the Luna private sale before the ICO will have tokens in the red. They bought at $0.18 and $0.80
@mikedulaimi Mikey on x
$LUNA is down 99% from its ATH of $119.18 36 days ago 🤯
@0x_emperor @0x_emperor on x
presenting to you the new stablecoin out of lfg, luna https://twitter.com/...
@chubbicorn219 @chubbicorn219 on x
Truly epic. This ones gonna have long term consequences. There will be the before Luna phase and the after Luna phase.
@twobitidiot @twobitidiot on x
I was here in 2013, 2015, 2017, 2019, 2021, and I'll be here in 2023 and 2025 too.
@novogratz Mike Novogratz on x
I'm officially a Lunatic!!! Thanks @stablekwon And thank you my friends at Smith Street Tattoos. https://twitter.com/...
@loopifyyy @loopifyyy on x
Wow, this is sad. I hope anyone who lost $ in LUNA is doing alright. 🥲 https://twitter.com/...
@tree_of_alpha @tree_of_alpha on x
Luna now down 97% from ath. #Bitconnect at its peak was $2.5b market cap and much less liquid, Luna was $40b. This is, by far, the biggest ponzi death spiral collapse in the history of Crypto, by a factor of 16. And a landmark case for protectoors to regulate us into oblivion.
@cobie @cobie on x
Haven't ever seen something this big go to zero like this before. It's like Titan except it went from being worth 100bn to 2bn in a straight line downwards
@algodtrading @algodtrading on x
Even after the typo i made i will still frame this https://twitter.com/...
@web3isgreat @web3isgreat on x
UST hit $0.30 overnight and is currently trading at around $0.50. Luna has plunged below $3, from its previous price of more than $80. There has been a marked change in tone in tweets by Terraform Labs CEO Do Kwon since the problems began a few days ago. https://twitter.com/...
@davidshares @davidshares on x
The mass deletions have started. #TerraLuna #UST influencers are now deleting all their tweets! https://twitter.com/...
@larry0x Larry on x
what's happening to Terra is apparently a coordinated attack with very powerful people behind it. it saddens me to see the majority of CT is in popcorn mode
@altcoinpsycho @altcoinpsycho on x
Damn https://twitter.com/...
@lomahcrypto Loma on x
This $LUNA price action almost feels like they're forced to mint more $LUNA to peg $UST which devalues $LUNA's price.
@mdudas Mike Daodas on x
gm never said it was gonna be easy in fact, we all said you were gonna feel absolute, grinding, gut-wrenching pain also, it's not over; sec staffing up, sharks smell blood in the water i'll be here, ready to fight web3 > web2 lfg
@lawmaster Larry Cermak on x
@Tradermayne Bunch of crypto funds in Korea will blow up. Few large funds in crypto will have massive losses. Retail absolutely rekt, the subreddit full of people talking about suicide. Some companies had treasuries in UST. Some businesses were built on top of Terra/Anchor. It's …
@mhonkasalo @mhonkasalo on x
A few hours ago started hearing that the Luna fundraise had fallen apart. Difficult to imagine any firm would put their reputation on the line back this dumpster fire. It's over. (deleted original tweet about this to not jump the gun, but now it seems clear)
@ryansadams Ryan Sξan Adams on x
Who saved you from investing in Luna? Thank them here. There's always a social cost to go against a popular narrative army in crypto. That's why almost no one does it. Let's thank the people who stepped up to tell us. We want them to stay. I want to thank @gametheorizing.
@0xdisco @0xdisco on x
TLDR, Arca rekt as always. Bought $LUNA on the weekend thinking peg would sustain. https://twitter.com/...
@rj_killmex @rj_killmex on x
Tldr sorry lads, we tried something, didn't think it through, leveraged it to our teeth and now it backfired damaging the whole industry with it now we just need your money again and we'll try something else
@terra_money @terra_money on x
Statement from @stablekwon on the corrective course for Terra. We're not going anywhere #LUNAtics — let's rebuild, together. Terra is here to stay. https://twitter.com/...
@petermccormack Peter McCormack on x
“The root problem with conventional currency is all the trust that's required to make it work.” - Satoshi Nakamoto https://twitter.com/...
@stablekwon @stablekwon on x
12/ As we begin to rebuild UST, we will adjust its mechanism to be collateralized.
@twobitidiot @twobitidiot on x
Algo stables are risky by definition. Perfect storm to put LUNA in this position, and I don't think it happens without the precise timing of the “attack” around the 4pool migration. Ethics / legal aside, it certainly looks like a kill shot (or a maim shot) by a savvy giant bear.
@carnage4life @carnage4life on x
This is like watching the crypto version of Lehman Brothers fall apart. https://twitter.com/...
@adam3us Adam Back on x
Really sorry for those who lost in @terra_money LUNA/UST defi. please learn ponzi risk warnings are volunteer education for public safety. Don't be fooled by “maximalist” retorts of promoters, it's a marketing pitch from ponzi promoters to take your money https://twitter.com/...
@laurashin Laura Shin on x
Omg omg 😳😳😳😳 😳 https://twitter.com/...
@speicherx @speicherx on x
I'm at a loss for words and my mental state is breaking. I'm sorry if anyone actually based their financial decisions on my educational posts & threads. End of the day, I'm still putting my work with Terra & TFL in the long term, but I can't ignore the astronomical consequences.
@davincij15 @davincij15 on x
Anyone buying the dip on $UST it hit a low of $0.23 today! I got some just in case they resolve the problem.
@thestalwart Joe Weisenthal on x
Holy crap $LUNA https://twitter.com/...
@glimmerycoin @glimmerycoin on x
Until $UST market cap is below $LUNA market cap OR a huge bailout comes to repeg, better steer clear or buying LUNA. That's just the way it's been designed.
@epolynya @epolynya on x
LUNA's economic security budget was 4 times higher just 2 days ago. I'd argue it's more than 4 time easier to attack today, and well within means of a well-resourced actor to force a liveness failure. Given high volatility and bridged across multiple zones of security (L1s)...
@cz_binance @cz_binance on x
One over leveraged “stable” coin...
@emilyjnicolle Emily Nicolle on x
Terra's UST going downhill, as low as $0.20 on Terminal. Luna also briefly slipped below $4. https://twitter.com/...
@safetyth1rd @safetyth1rd on x
i dont know if this is deliberate or a bug but if it is deliberate its a really bad decision protecting luna price at the cost of ust makes no sense - ust down -> luna down if its a bug i dont know what to say, this is the core mech pegging the stablecoin.
@emperorbtc @emperorbtc on x
Extremely sad for the people who were innocent, fell for the ALL IN LUNA shit and bet all their savings. Not the first time a cult leader drowned the lives of innocent believers.
@0x_b1 @0x_b1 on x
So sad to see this chapter of DeFi come to an end. RIP $UST
@thecryptolark Lark Davis on x
$ust went down to 22 cents. Insanity!!!! This is bad for all of #crypto
@thinkingusd @thinkingusd on x
Please do not kill yourselves. I know it feels like the world is ending and you're at rock bottom if you lost all your money from Luna/UST and maybe you even lost some of your friends or families money, investors, whatever. I don't know who has to see this but it will be okay.
@bongcapital @bongcapital on x
At what point do we just stop calling $UST a stablecoin? *TERRAUSD STABLECOIN PLUNGES TO AROUND 35 CENTS
@thestalwart Joe Weisenthal on x
This isn't a bailout announcement https://twitter.com/...
@trustlessstate @trustlessstate on x
It's beside the point. Even if it was a “coordinated attack” All that matters is: if it can be attacked, it will be attacked. https://twitter.com/...
@xrpcryptowolf @xrpcryptowolf on x
LUNA and UST are worse than Bitconnect because it was a lot bigger in terms of marketcap so just imagine how many lives were destroyed. There's no coming back from this
@tradebutwhy @tradebutwhy on x
“I'm very bullish LUNA, most of my net worth is in LUNA and LUNA alts” Delphi Digital's founding partner Jose Macedo one month ago (April 7) on the Bankless podcast when LUNA was $105. Fuck. https://twitter.com/...
@scooterxbt @scooterxbt on x
Luna is gonna be the first crypto to trade negative
@punk6529 @punk6529 on x
indeed. this is the time to reach out to family and friends if you need to. https://twitter.com/...
@lsukernik Larry Sukernik on x
So many reputations worked on for years got burned in the span of several weeks. Painful lesson to not get in bed with the wrong people.
@beniaminmincu @beniaminmincu on x
Algorithmic stablecoins are extremely hard. Much harder than people realize. Directional progress made by @stablekwon has been remarkable. Problem is all security depends on a highly complex, reflexive, feedback loop. If it works, you're a genius; if not, it's super tough.
@hasufl @hasufl on x
UST is worse than Bitconnect. At least Bitconnect didn't masquerade as a stablecoin. When your ponzi targets people's savings (not investment) portfolio, there is a special place in hell reserved for you. Half of CT influencers, VCs, and trading firms are complicit.
@whalepanda @whalepanda on x
What I don't get though is why not pause $Luna until you've figured things out? Plenty of other coins have done that before. It's not like anyone is thinking it's actually decentralized.
@punk6529 @punk6529 on x
this sucks. we will see this play out in coming weeks [for next time around fam, there is no “safe” yield, ever, in any financial instrument, of any type. the reason they are paying you yield is specifically bc it is not safe and the more they pay, the less safe it is] https://tw…
@altcoinpsycho @altcoinpsycho on x
Just wait till we find out which defi projects had their treasuries in anchor / UST... I think we're about to some big names go under, and I can't imagine this boding well for BTC. Regulatory fud going to be relentless these next few months too. Stay safe
@thecryptodog @thecryptodog on x
Oh no, Terra / UST really is going to 0 right now. That's really awful.
@ksicrypto @ksicrypto on x
The sad thing about this $LUNA situation is that it will just make the general public steer CLEAR from crypto
@alexhern Alex Hern on x
Tired of people looking at the downside here. Massive spike in GBP vs Luna. Gains for everyone who's kept their assets in Central Bank Coins. WAGMI, GBP to the moon https://twitter.com/...
@coinmarketcap @coinmarketcap on x
UST has plummeted to $0.38 — and LUNA has fallen by 82% in 24 hours 📉 Both tokens are now in freefall after Terra co-founder Do Kwon failed to produce a recovery plan 👇 https://coinmarketcap.com/...
@gfodor @gfodor on x
So once the stock market crash is no longer the Current Thing, it goes back up again, right?
@drwasho Washington Sanchez on x
RIP $LUNA, we hardly knew thee.
@can @can on x
terra walked so tether could run
@bongcapital @bongcapital on x
Hi crypto investors! Can I interest you in some algorithmic merger arbitrage stablecoins? https://twitter.com/...
@loomdart @loomdart on x
What's so fucked about all of this is anchor was seen as safe yield for projects that wanted to deploy their treasuries
@eevee @eevee on x
completely wild to watch cryptocurrency folks discuss various tokens like they were the stock of national companies and not a thing some guy made on his computer by cloning a github repo and changing “bitcoin” to “jamescoin”
@0xmisaka @0xmisaka on x
The sad part about this is it shouldn't have been exacerbated to this level. DO and his army attacked people just by trying to have healthy discussion on UST mechanism. A lot of smart ppl who are talking now didn't talk about UST before because toxicity and fearing of backlash
@cz_binance @cz_binance on x
Positive side: Crypto will stay.
@cobie @cobie on x
Feel sorry for those that lost everything, unfortunately going to be lots of normal people that cannot stomach those losses, it's very bleak
@tradermayne @tradermayne on x
I want to sleep but I can't. We are witnessing history. Seen a few things like this happen in $Crypto. It's a car crash you can't look away. Think of the ripple effects. Funds holding $UST. Treasuries. Political/regulatory implications.
@baekkyoumkim @baekkyoumkim on x
Devastated As an early supporter of Terra, I am very sorry to my friends in the community Builders in Terra ecosystem are my best friends w/ amazing talent, love and passion in this space I am personally reaching out to many of you Please let me know, I am here for you
@gbrl_dick Gabriel on x
you're talking about santa? UST is depegging and you're talking about santa?
@fomomental @fomomental on x
Lord have mercy on these poor souls https://twitter.com/...
@misinterpreth @misinterpreth on x
Stakers got the shortest straw. Must be brutal to watch it being sidelined. https://twitter.com/...
@xbenjamminx @xbenjamminx on x
“According to Terra Analytics, around 152 million LUNA is being staked on the network — excluding liquid staking through Lido, where tokens aren't as tied up . That represents 30% of the circulating supply of LUNA.” “it's 21 days that you have to wait to get your tokens back.”
@xbenjamminx @xbenjamminx on x
As Luna holders watch the token slide, many won't be able to cash out for weeks Stuck on the sidelines are those who own Luna tokens and have them staked. These holders are watching the value of their tokens sink and aren't able to do anything about it. https://www.theblockcrypto…
@justinaknope Justina Lee on x
I guess a 50% discount isn't too attractive for a token that has *checks notes* lost 90% in the last 24 hours https://twitter.com/...
@lawmaster Larry Cermak on x
The details I have heard but might not be final: - Jump, Celsius and Jane St. committed already, Alameda not yet - targeting $1B - $1.5B raise - 50% discount to LUNA spot with 1yr lock + monthly linear vest over 1yr - total of ~$700M in commitments as of morning https://twitter.c…
@lawmaster Larry Cermak on x
@Mudit__Gupta Yea as far as I can tell, the deal is dead LMAO
@emilyjnicolle Emily Nicolle on x
making moves: Terra now seeking $1.5bn, offering Luna at 50pc discount with 1-year lock up & monthly vest over 12 months. @stablekwon says UST's moving to a collateralized mechanism, but needs more outside cash to do it. w/ the amazing @Suvajourno https://www.bloomberg.com/...
@amdtrades @amdtrades on x
The most successful companies start off with very little money because they're forced to become resourceful and grow steadily while not missing anything that could hurt the business. When a company has access to large capital right away, everyone gets comfortable. https://twitter…
@xamanap @xamanap on x
Probably not enough dough. https://twitter.com/...
@notsofast @notsofast on x
I kind of hate what crypto has become https://twitter.com/...
@fintechfrank Frank Chaparro on x
Confirms they are still looking to bring in outside capital to “reduce supply overhang on UST” https://twitter.com/...
@criptopaul @criptopaul on x
like a gambler who resorts to loans when he goes rekt https://twitter.com/...
@raaleh @raaleh on x
incredible that algorithmic stablecoins have gone from “new, revolutionary product” to “incredibly expensive centralised bailout” already https://twitter.com/...
@fintechfrank Frank Chaparro on x
I'm starting to think they're not close to having a plan
@wublockchain @wublockchain on x
The Block Larry Cermak says LFG's $1 billion financing plan has failed. He previously said that Terra aims to raise $1-1.5 billion to “save” UST. Jump, Celsius and Jane St. have committed (about $700 million), but Alameda has not. https://twitter.com/...
@biancoresearch @biancoresearch on x
The crypto federal reserve stepped in and are Kwontitative Easing UST back to its peg. https://twitter.com/...
@fintechfrank Frank Chaparro on x
Will touch base with my sources shortly, but given the price action this likely fell apart Luna Foundation Guard seeks more than $1 billion to shore up UST stablecoin: sources https://www.theblockcrypto.com/ ...
@lawmaster Larry Cermak on x
One thing to keep in mind is that this deal is not closed yet and is still in active negotiations. The terms now might be different and obviously, some parties could still de-commit. Would expect an announcement from LFG in the next two days and impressive interest is this high
@hsakatrades @hsakatrades on x
Some surprise names, some notable absences. Interesting. https://twitter.com/...
@stablekwon @stablekwon on x
Close to announcing a recovery plan for $UST. Hang tight.
@stablekwon @stablekwon on x
Deploying more capital - steady lads
@stablekwon @stablekwon on x
1/ The LFG Council just voted to deploy 1.5B in capital (0.75B in BTC, 0.75B in UST) to allay market concerns around UST. Some more context on why and how: https://twitter.com/...
@caspiancey @caspiancey on x
Do Kwon has had a lot of opportunities to reflect, apologize, and stop making promises he can't keep. I don't feel sorry for him or anyone who stays invested at this point.
@sbf_ftx @sbf_ftx on x
Just as the outside view skeptics predicted, during a large market move a stablecoin blew out. Just not the stablecoin they predicted. Which was predictable, if you knew the details. This isn't a comment about good vs bad—it's about how important it is to know the details!
@cryptomanran Ran NeuNer on x
I can't even imagine what @stablekwon is going through right now! Not only is he fighting to save his project & rescue a huge community from losses but now he is also enduring a barrage personal attacks. 1/2
@livercoin @livercoin on x
Do kwons recovery plan : “Hey guys, so we are stepping away from Luna, obviously it was a failed experiment but we are going to use the rest of the assets to fund our new panda nft collection!”
@livercoin @livercoin on x
Jokes aside now If Do Kwon can put together at least a little bit reasonable plan to save the ecosystem without destroying $LUNA, it's most likely going to pump like 500% from here. Because right now it's pure panic, capitulation and greed from bears. https://twitter.com/...
@crypstax @crypstax on x
trust the code they said 🤨👇😡 #UST #LUNAtics https://cointelegraph.com/...
@0x_b1 @0x_b1 on x
One Do Kwon tweet and we see this green candle.... He has more influence on the crypto markets than even the infamous @elonmusk ! Wonder what happens when he actually announces the recovery plan! https://twitter.com/... https://twitter.com/...
@lomahcrypto Loma on x
He'll announce at zero dw :D https://twitter.com/...

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