What caused the value of Terra USD to fall to zero?

[Good-Person]

Terra USD was a very popular cryptocurrency. It was supposedly "pegged" to the value of dollar. This means that the value of one Terra USD was equal to a single dollar. However, during the mid of 2022, the value of Terra USD fell suddenly and unexpectedly. This was something many people found quite surprising. So, what happened?

 

[Henrywrites]

The challenge that we always have with some upcoming projects in the crypto coins industry is that of investors pulling out when you least expect. So, that could have been the reason we had a challenge with the Terra USD having a quick fall. That was unexpected for many traders back then.

 

[Heatman]

The reasons was that the UST was algorithmically linked with LUNA for stabilization. The UST got depegged since the total value of UST can't be redemmed against LUNA. All who had the stable coin sold it off as they lost confidence in the coin. This led to the collapse of the coin in 3 days in May 2022 and wipped out $50 billion in the coins valuation.

 

[Nomad]

It was a rug pull. The owner of Terraform Lab was moving investors' funds to his private account. he had nothing in mind except to cheat on people.

 

[Heatman]

It was a rug pull. The owner of Terraform Lab was moving investors' funds to his private account. he had nothing in mind except to cheat on people.

It's very unfortunate that investors had no idea what was going on until over $50 billion worth of the coins valuation went up in some. All these are part of the reason why some people have serious skepticism when it comes to investing in cryptocurrency.