Terra / LUNA: The Unraveling
May 2022
A dollar peg failed, and an interconnected ecosystem began to unwind.
Origins
TerraUSD, or UST, was marketed as a stablecoin intended to track the US dollar. Its design linked its supply mechanism to LUNA rather than simply maintaining a matching bank deposit for every unit.
The moment
UST lost its dollar peg in May 2022, and the prices of UST and LUNA collapsed. The SEC’s later trial summary describes the depeg and the losses that followed. This record avoids assigning a single day to a failure that unfolded across several days.
The aftermath
The collapse intensified scrutiny of stablecoin design and the dependencies built around it. The later legal findings provide a different kind of evidence from a contemporaneous price chart. Its connection to FTX locates both within 2022’s crises without treating them as the same mechanism.