A must-read epic market history for cryptocurrency enthusiasts: "Moutai", a market value of hundreds of billions turned to zero in one day!
In 2022, Do Kwon was the undisputed deity of the cryptocurrency world.
In his thirties, arrogant and unrestrained, he single-handedly created LUNA and UST, supporting a $40 billion cryptocurrency empire, revered by countless retail investors. His UST, with high returns, became the "wealth vault" of many people's life savings, and everyone believed it was a myth that would never collapse.
But this empire concealed a deadlock from its very foundation.
UST is not a stablecoin backed by sufficient real assets; it relies solely on algorithms to maintain the value of 1 UST equal to 1 USD in LUNA, which can be freely exchanged, destroyed, or minted. Without reserves, it solely depends on confidence. Once that confidence collapses, the UST, which serves as the foundation, will perish.
Wall Street shorts saw through this fatal flaw. They lurked in the shadows, pouring in tens of billions of dollars to short UST, not LUNA, but targeting the lifeline of UST.
Do Kwon, unwilling to back down, gathered whales and exhausted national reserves to initiate a short squeeze. He frantically bought LUNA and destroyed UST, pulling the coin price from $80 to a historic peak of $119, causing shorts to retreat one after another, while retail investors cheered, believing victory was within reach.
Yet the crisis quietly erupted from the foundation.
The shorts acted first, dumping UST, which should have been stable at $1, suddenly plummeting to $0.9.
As the credit cornerstone of the entire ecosystem, the decoupling of UST instantly ignited extreme panic!
Retail investors crazily rushed to redeem and sell, everyone wanted to convert UST into cash to escape. To stabilize the situation, the system could only mint unlimited new LUNA to absorb the massive outflow of UST.
A flood of LUNA surged into the market, circulating volume skyrocketed to trillions overnight, the selling pressure completely crushed the market, and the death spiral closed completely: the more UST collapsed, the more LUNA was printed, the more LUNA fell, the more panic there was around UST.
Do Kwon spared no effort to defend the price, but ultimately could not stop the collapsing confidence. He could raise the price of LUNA, but could no longer hold on to the already shattered UST.
In 72 hours, hell descended.
LUNA dropped from $119 to $0.0001, UST became a worthless number, and the empire collapsed in an instant.
Wall Street shorts raked in hundreds of billions and exited unscathed, Do Kwon's pedestal fell, fleeing in panic; 800,000 retail investors lost all their hard-earned money overnight, and hundreds of billions in market value vanished into thin air.
The most fragile thing in the world is not the coin price, but the human heart
$USTC $LUNC #LUNA