A USTC ↔ LUNA–style reflexive model could function with strict safeguards: capped minting, circuit breakers, credible reserves, and conservative scaling. This is what Changpeng Zhao meant when he said the concept wasn’t the issue.
Where Terra Failed Under Do Kwon, execution was fatally flawed:
Unlimited reflexive minting
No automatic shutdown on peg failure
Growth prioritized over risk controls
Ignored stress-test warnings
Once USTC depegged, the system didn’t stabilize—it accelerated into a mathematically inevitable death spiral.
After the Split
LUNA (new) moved forward with credibility damage
LUNC became a speculative remnant
USTC lost any realistic chance of regaining trust as a stablecoin
At this stage, LUNC/USTC price action reflects speculation, not recovery.
Accountability & Lessons With legal consequences now attached, Terra is no longer a debated narrative—it’s a documented case study in systemic negligence.
The Real Market Alpha
Scale amplifies flaws faster than vision
Big narratives + weak risk controls don’t unwind slowly
They implode—and retail pays first
Honest Questions Investors Must Ask
Was it a smart idea ruined by reckless leadership? → Yes
Can trust return after a stablecoin collaps?
