The Mad Journey from Terra to GENIUS
The crypto industry has transformed dramatically since its darkest chapter in 2022. One of the most unforgettable collapses was Terra, a Layer 1 blockchain created by Do Kwon, where the LUNA token was tightly linked to the algorithmic stablecoin UST. The system relied on a balance mechanism: minting UST burned LUNA, while redeeming UST created more LUNA.
This model appeared successful as long as demand for UST remained strong, fueled largely by Anchor Protocol’s attractive 20% annual yield. However, in May 2022, massive sell-offs caused UST to lose its $1 peg. Panic redemptions flooded the market with newly minted LUNA, crashing its price and triggering a destructive feedback loop.
Within just 72 hours, more than $40 billion in market value vanished, marking one of the most catastrophic failures in crypto history — a moment that reshaped how the industry views stablecoins forever.
$