Luna / UST algorithmic collapse
TerraUSD was an algorithmic stablecoin that held its peg to the dollar by dynamically minting and burning its partner token, Luna. When UST broke its peg on May 9, 2022, the mechanism designed to restore it produced an infinite supply of Luna to a nonexistent bid. Sixty billion dollars evaporated in three days. The first large-scale real-world test of crypto's claim to create sound money without reserves.
Luna/UST had been publicly critiqued by multiple cryptographers and economists for two years before it collapsed. None of those critiques changed its market capitalization, which peaked near $40B. The collapse triggered the broader crypto winter of 2022 and the FTX failure six months later. The pattern fits every history on this site: a new mechanism promised to escape an old constraint, scaled past what skeptics said was possible, and broke in the way skeptics predicted.
07 · Crypto & Digital Fiat
Bitcoin proposed something new: money whose supply rules are enforced by mathematics rather than by a sovereign. Within fifteen years, crypto had become a $2T+ asset class and triggered central banks to build their own digital currencies. For the first time since the invention of coinage, the question of who issues money is genuinely open.
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