Whether for better or worse, once again there is an event to remember in the history of cryptocurrencies.
The collapse of UST and Terra highlights how wild the world of finance can be and, specifically in the crypto world, how premature some protocols still are.
Because in a new ecosystem, any solution is pioneering in some way and at the same time an unknown quantity.
Why did Terra go down?
Although not yet confirmed, it is almost certainly believed to have been an organised attack against the UST, to make it lose parity with the dollar and provoke a massive sell-off by the FUD.
Thus forcing FUD to use its Bitcoin and Terra reserves to try to recover its stablecoin. This strategy did not work and eventually collapsed the entire blockchain due to the massive FUD sell-off and lack of liquidity.
One of the main reasons for choosing UST as a target of the attack is because of its nature as an algorithmic stablecoin.
An algorithmic stablecoin earns higher than average returns which, in the long run, makes the system unsustainable and susceptible to organised attacks.
At BitcoinRock we believe this is a good reminder that everything has its risks and you should invest with knowledge and above all not get carried away by FUD.