#新币挖矿&盘前交易USUAL
Scams and risks in cryptocurrencies: the story of LUNA and LUNC
The LUNA project and its associated token LUNC (Terra Classic) have become symbols of the cryptocurrency crisis, showing that even the most ambitious projects can quickly collapse. The story of LUNA teaches us a lesson about the risks of cryptocurrency investment and the pitfalls that need to be avoided.
What are LUNA and Terra?
LUNA is tied to the Terra platform, an ecosystem for building stablecoins. Its flagship token UST is pegged to the US dollar through an algorithm, which adjusts the price of UST by issuing or destroying LUNA.
What went wrong?
Problems with algorithmic pegs
UST doesn't seem to be backed by real reserves, it relies on algorithms and LUNA. When there is a large-scale sell-off, the system cannot maintain the peg and the value drops sharply.
Panic and hyperinflation
The sell-off of UST led to a large-scale issuance of LUNA, which almost lost all its value. Investors suffered heavy losses, and the reputation of the project plummeted.
Lessons for investors
Avoid complex mechanisms
UST’s algorithmic peg proves that this model is unreliable for stablecoins. Evaluate the stability and mechanism of the project before investing.
Real reserves are important
Only real assets can increase the stability of the project. Terra’s lack of reserves turned out to be its Achilles’ heel, leading to its collapse.
Panic exacerbates the decline
In the cryptocurrency space, market sentiment has a great impact on project stability, especially in times of crisis.
After the crash, a new version of the token, LUNC, was launched, but people’s trust in the project was still damaged. The story of LUNA/LUNC reminds us how important analysis and caution are when choosing crypto assets.
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