# Terra Crash - May 2022

Terra an algorithmic stable-coin that should maintain a $1 peg is crashing and has broken its peg (first on sunday 8th May) and then more seriously on 10th May 2022.

The organization is liquidating large amounts of bitcoin (over $2bn) to try and defend the beg which illustrates the potential contagion risk in the crypto ecosystem.

> Terra (LUNA) Collapses 60% as UST “Stablecoin” Drops Below $0.7 - https://u.today/terra-luna-collapses-60-as-ust-stablecoin-drops-below-07

https://blazetrends.com/terra-price-collapses-after-attempt-to-rescue-stablecoin/

> A complete collapse of Terra
>
> Rumors of a complete collapse of Terra quickly spread on social media. Nevertheless, the company co-founder, Do Kwon, kept calm. However, the founder had to liquidate a huge number of Bitcoins to save the stablecoin.
>
> Data from monitoring source BitInfoCharts confirmed the huge sales. The balance of the de Luna Foundation Guard went from 70,000 Bitcoin, (worth $2.23 billion), to 0 Bitcoin.
>
> The Luna Foundation Guard did say that they have not sold all Bitcoin and promised to update the community on the current situation.

https://twitter.com/vhranger/status/1523835842573357057


# Background

https://www.bloomberg.com/news/features/2022-04-19/terraform-s-do-kwon-s-huge-bitcoin-buys-catch-crypto-billionaires-attention [@shen-regan-2022-king-lunatics-becomes]

> Back in Miami, Novogratz sized up Kwon’s pivot to Bitcoin as a reserve asset to back up UST.
>
> “It’s not without risk, right?” he told the audience in his keynote address at the conference. “He’s in this transition right now. The plan is to buy $10 billion worth of Bitcoin. And as that ecosystem grows, that number will grow. **That’s all good as long as there’s not a run on the bank.**”

# Tweets

https://twitter.com/hasufl/status/1523803732173103107

> No matter how this ends, I don't want people to call UST decentralized again. Even the little collateral backing it has is intransparent and controlled by a single party. Used to perform discretionary open market operations. This is like 10x worse than the Fed.

https://twitter.com/lawmaster/status/1523844709319327744

> There is a rumor spreading about Jump, Alameda, etc. providing another $2B to “bail out” UST. Whether this rumor is true or not, it makes perfect sense for them to spread. The biggest question here is, even if they can get it to $1 by some miracle, the trust is irreversibly gone