The fall of UST - Reasons?

I'm wondering on how could Terra crashed down..Checking all this posts on r/Terraluna..Brrr

    Answers 2


    Taking money from investors in Luna to pay off (i.e. pay exuberant "staking rewards") to existing investors in Terra. Definition of a Ponzi scheme. Modern implementation of the centuries-old idea.


      UST is an algorithmic Stablecoin that is based on code, constant market activity and trust. Its PEG multiplier, which helps assess the fairness of the asset's price, was in theory supported by an algorithmic peg to Terra's base currency, Luna. When the staking was opened at 20% a massive pumping of funds began. And then the laws of the market took over.