(In may price of Luna crypto has fallen to zero wiping out the billion of funds from the market)
The disastrous fall of Luna crypto has shocked people wiping out billions of funds from the digital currency space. As a result, many people are searching for Luna Crypto news today to check whether it is recovering or not.
May’s disastrous turn of Terra USD and Luna coins brought an unfortunate event to the entire crypto market. People have made a massive loss because of this crash. The global digital currency market has shaken after this crash, and different speculations were heard from people and experts. The cash is one of the biggest downfalls in the crypto market, estimated to wipe out $60 billion in funds shaking the global crypto market.
Everyone is searching for different stories on Luna crypto news today. The crash has impacted the whole crypto industry, which is trying to recover from the catastrophic loss. Moreover, this sudden crash also caused a liquidity crunch in the crypto space making the situation worse for the crypto market.
Key points
- Luna market collapse has wiped out almost $60 billion from the digital currency space.
- Tera is a blockchain network supporting algorithmic stablecoins with its native token, Luna, and stable coin terra USD.
- Binance, one of the biggest crypto exchange platforms, delisted Luna after the crash.
- Algorithmic stablecoins are different from Tether or USD and relatively created to maintain stable value in the market.
What is Luno Crypto?
Terra is an open-source blockchain Network supporting algorithmic stablecoins and decentralized applications. Based on the two-coin system, Algorithmic stablecoins are mainly crypto assets that depend on two types of coins: a crypto token and a stablecoin.
Luna classic is a native token of terra blockchain that powers terra blockchain and supports all the operations across the network. Luna and Terra USD are the sister coins on the same network. It is a native token of the network, while Terra is a stablecoin designed to maintain a stable value.
Terraa lab was founded in 2017 to create an algorithmic stablecoin system using stable coins (Terra USD) and Luna.
Terra is a type of Blockchain network like Ethereum and Bitcoin that produces Luna tokens. It was created in 2018 by Do Kwon and Daniel Shin.
After this unpredictable crash, an arrest warrant was issued for Do Kwon, the co-founder of Terraform Labs, where both these tokens, Luna and Terra USD, were held.
Terraform had created a stablecoin TerraUSD on their network. Unlike other cryptosThis coin is not fiat-backed but is always backed by its sister token Luna. Luna was a native token of the Terra network, just like Ether works on the Ethereum network.
No one has predicted such a disaster for Luna because it performs various roles. However, the Luna Crypto news today has severely shocked investors. Let us know about the roles played by Luna.
- It maintains Terra’s stablecoin peg.
- A Method of paying transaction fees on Terra’sTerra’s network.
- It also works as a role of staking delicate Proof of Stake to validate all the transactions.
- It participates in the platform’s governance.
What was Luna’s worth?
While the other stablecoins, such as USDC or Tether, are backed by fiat currencies such as the dollar. Fiat currencies do not back UST; instead, it is supported by their native token Luna.
Stablecoins are considered safe because they have low volatility and a relatively fixed value. As a result, Luna was always the preference of many investors and traders because many became millionaires because of this token.
In 2021, the price was less than $1. and till in 2022, the cost of Luna went up to $116, and people have earned a lot from this coin.
This made Kwon’s cult hero in the eyes of many retail investors who generated millions by investing in Luna.
Many stories have popped up in the media about how regular folks have earned a decent profit from Luna. The rise of around 135% in just two months stunned everyone before its final peak in 2022.
The largest incentive story was that UST holders could generate a 20 % yield by staking on the anchor lending platform. However, many analysts believed this exorbitant rate could not be sustained longer.
The anchor protocol was a decentralized money market built on the terra blockchain, which became popular after its aforementioned 20 % yield on UST holdings. Many USD holders were interested in this revenue system and deposited their tokens on the platform. In this way, the anchor would loan the deposit to other investors.
Many people considered this a blatant Ponzi scheme concerning where this money came to pay these interest rates. At this point, almost 72% of the deposit was made on the anchor platform because of its primary demand for Terra.
Why did Luna crash?
The main reason for the Luna crash is its connection to Terra USD, an algorithm stablecoin of the Terra network.
On May 7, more than $2 million worth of UST was unstacked, basically taken out from anchor protocol, and millions of it were quickly liquidated. There was a debate about whether this happened due to increasing fed rates or if it was any malicious cyber attack on the terra blockchain.
There is no concrete evidence why this fall came; it might be because of rising interest rates or a harsh attack on the Terra network.
This bearish market brought the UST price from $1 to $0.91. Conclusively, traders have started to exchange 90 cents worth of USD for $ 1 Luna.
In this way, large amounts of USD offloaded and stablecoin started to Depeg. In a panic, many investors sold off UST. As a result, the minting of luna began, and sudden supply increased in circulation.
Following the crash, many crypto exchanges and popular platforms like Binance delisted Luna and UST from their platform.
Following this crash, more people have started searching for Luna Crypto news today to know more about this token and the Terra network. In addition, they were getting curious to learn more about the token and market instability.
People recognized that a large amount of UST was getting offloaded. That’s why they started selling UST and managed their portfolio as per the situation. There was a direct impact on Luna, and the crypto exchanges started delisting Luna, and it got utterly abandoned.
What happened after Luna crashed?
The meltdown of Luna brought a significant impact on the crypto market. Unfortunately, the crypto market was already going through a challenging phase, and this event caused another downfall in the crypto market.
The price of Bitcoin and many other altcoins started falling after this crash. As a result, people from different regions have suffered an enormous loss. It was estimated that this crash had made a loss of over $300 billion in the crypto space.
The traders and investors have lost their life savings in Luna and have shared their stories on social media. If you search online, you will find many stories where people have expressed their sad stories. In addition, many lunatics (a popular term referred to as luna fans ) also expressed their concerns on Reddit threads.
Winners are only those who could exit before the crash. We only found winners who left right before the market crashed. One such example is the hedge fund Pantera Capital which existed before the collision and liquidated $171 million.
What happened to the Luna crypto founder?
After the crash, Do Kwon, the founder of Luna, created a plan for its recovery so that people could balance their losses. But Luna ultimately plummeted, and there was no chance of recovery because it was abandoned. So Terra is ready with a new coin, Luna 2.0.
Four months after the crash of Luna and UST, an arrest warrant was issued against Do Kwon. It was believed that Do Kwon and five others had violated market laws and tried illegal fundraising methods.
Do Kwon is living in Singapore currently? Of course, but if the South Korean government has taken strict action against him, he must be in the country within 14 days of the notice period. As a result, more than 2,80,000 people in South Korea have invested in Luna and suffered a severe loss.
Conclusion
If you are investing in digital currencies, you have to accept there is some risk associated with this market. Hopefully, we can expect this Luna crash will mark the beginning of a new crypt era. The wiser decision is if an investment seems too good to be true, it is profitable. Otherwise, investors should risk 5-10 of their portfolio.
FAQs
Q. What happened to Luna in May 2022?
Ans. Luna classic, the original coin of the terra blockchain, was the cause for its difficulties. When its old UST sable coin lost pegged value from the dollar, it caused the whole terra ecosystem to crash.
Q. Should we buy Luna now?
Ans. Some experts believe it is a good time to buy Luna as this could begin a new era. However, analysts believe that Luna can take some time to recover, and it’s likely a good buy now.
Q. What is Luna crypto?
Ans. Luna crypto is the original coin of terra blockchain. It powers all the operations of the terra network and supports its sister coin terra UST.
Q. How is the price of Luna determined?
Ans. Similar to other coins, the supply chain demand on various exchange platforms determines the price of Luna. The price of the coin can be affected by the macro and micro economic events and development in the system.
Q. How can I store Luna Crypto?
Ans. Luna crypto can be stored on the wallet that supports the Terra blockchain. You also get private keys for the safety of funds.
