The value of Terra’s native blockchain network token, called Terra (LUNA), has plummeted 95% in the past week, dropping from $87 (as of May 5, 2022) to $4.12 (on trading day May 11, 2022).
The huge fall in the exchange rate of the main domestic currency led to the collapse of the total value locked (TVL) in smart contracts. Decentralized finance (DeFi) platform Anchor experienced a devastating loss of 76.5% of the size of TVL, recording a decline in the index from $17 billion to $3.99 billion. These data were current as of 11:50 Moscow time on May 11, 2022.
At the top of trading in April 2022 LUNA rose to $119. However, this course did not last long. The main reason for the steep dive was the loss of the fundamental peg of stablecoins USTissued on the basis of the Terra blockchain to the US dollar.
The decision was forced. Its adoption was facilitated by the provision of assets by bitcoin funds, which began to suffer losses amid the fall in the price of BTC. Having lost control of the situation, the main support of the network made an additional issue of 46 million LUNA tokens. The issue, not backed by assets, caused a panic in the market and, as a result, a devaluation of the value of Terra.
Experts said that such a series of disastrous actions is the most serious setback in crypto history.
The attitude of traders towards LUNA on social networks has escalated to such an extent that official messages of representatives with helplines for desperate coin owners who are thinking about suicide appear on the Terra forum.
Earlier edition reported that this situation has already attracted the attention of the US authorities, who expressed concern about the fate of stablecoins.