I still remember the spring of 2022 like it was yesterday. Almost everyone was talking about Terra and its coins. In April 2022, LUNA even hit its all-time high price. But just a few weeks later, it crashed badly.
The core issue started with a stablecoin named UST. This coin was supposed to stay at 1 UST = 1 USD, but in early May 2022 it began to fall below $1. When it lost its dollar peg, many people got scared and rushed to sell. This made prices drop quickly.
Normally, the Terra system used special rules to keep UST stable, but those rules caused a big problem this time. People were burning their UST to get new LUNA coins instead. This caused huge amounts of LUNA to be created very fast — in just a few days, trillions of new LUNA were made, making the price collapse even faster.
By mid-May, both the stablecoin and the LUNA token had lost almost all their value — billions of dollars disappeared in just days, and the project team had to stop the network to avoid further chaos.
After this crash, the original LUNA blockchain became Terra Classic, and its coin was renamed $LUNC . Because trust was shaken so badly, many people sold their LUNC or avoided it altogether — and that lack of demand kept the price very low.
This event was one of the biggest crashes in crypto history, and many investors still talk about it today. When you look back at big market events like this, it makes you wonder: how much do confidence and community trust shape the value of money — even when it’s digital?