A year ago today Terra USD began it's depeg from $1. In seven days the price of the stablecoin dropped to $.16 and the price of Luna dropped to . 0001. With both dropping further over the following weeks. Remembering what happened.

A year ago today Terra USD began it's final depeg from $1 with the price sitting at $.9999 after two days of fighting to hold the peg, the price plunged down to $.80 and then $.16 by the end of the week. A year later the price of the unbacked stablecoin sits at $.018.

https://preview.redd.it/5czta9om28ya1.png?width=922&format=png&auto=webp&v=enabled&s=2db9cebd2970574e17dcb593874439e319447a9c

Luna was sitting at $77.47 a year ago today a week later the circulating supply increased from 342M to 6.5T in one week with the price dropping to $.0001. The current price today is $.00009

Terra Luna - 1 year chart

This post shows the one year increase in the circulating supply. Notice the huge spike at the beginning coincided with the last days of the depeg. 342M to 6.5T

https://messari.io/asset/terra-luna-classic/chart/sply-circ

This post detailed what was happening when Terra USD depegged and was a warning for people not to buy.

UST and Luna price are directly related - You can burn Luna and mint UST, or you can burn UST and mint Luna. On May 8th (not including any fees you could burn about 60 UST ($60) to get 1 Luna ($60) - when UST started depegging people became financially incentivized to burn UST and convert it to Luna - increasing the supply of Luna. Since demand isn't keeping up with the increased supply - the price of Luna is continuing to crash. Currently with 1 UST worth $.55 and 1 Luna worth $.0058 (not including fees you can mint 330.57 Luna for $1 (true dollar) of UST.

No post on the failure of Luna would be complete without the "FUD post" that aged like fine wine. On March 10th 2022, two months before the final depeg a Reddit User by the name of /u/cwm9 wrote a post challenging the CryptoCurrency Reddit community to explain why Terra Luna wasn't a scam. In that post he created a hypothetical of what would happen to Terra in the event of a depeg which was contrary to the narrative being spread about a depeg event, and to his credit it happened exactly as they suggested.

But go the other way: when people start selling their UST because they want to go back to bitcoin, they mint Luna and sell it. Now the price of Luna goes down. The fact that the price is going down and total coins minted is rising encourages the selling of Luna making the price drop farther. If the price drops too far, it can no longer support the burning of UST to get a dollar by selling Luna.