A huge drop in the value of a major stablecoin has shaken the crypto world, and the real-life consequences of the collapse are playing out on social media.
TerraUSD (UST), an algorithmic stablecoin that should always be worth $1, lost its peg to the U.S. Dollar last week and has dropped to as low as 30 cents. Luna, its sister cryptocurrency that is tied to the price of UST and is used to “stabilize” UST’s dollar peg, lost 97% of its value between Tuesday night and Wednesday morning. As of Wednesday, UST had still not recovered its dollar value, and Luna was trading down more than 90% at $1.79.
Now, the pinned post on u/TerraLuna, a Reddit forum dedicated to the Luna cryptocurrency, is a series of links to help lines around the world, including the National Suicide Prevention Lifeline.
“For everyone panicking, here are some National helpline numbers,” the title reads.
A barrage of posts in the forum lay out the experience of dozens of users who say their investments in Luna have led them to lose anywhere from thousands of dollars to their entire life savings.
One member of the forum, No-Forever2056, said in a post that they had thought about cashing out when Luna was trading at $100 in March and early April, but held off to see if they could earn enough for a down payment on a house. When Luna crashed, they said they lost $17,000.
“I really believed in the project and the builders in the ecosystem. I didn’t get out because I got greedy and hoped it would go up more,” said No-Forever2056, who declined to give their real name. Coins2Day reviewed screenshots of the person’s Luna purchases, but could not verify that the screenshots belong to No-Forever2056’s wallet.
“Well now even if I want to get out, I can’t as all my luna was locked staking,” No-Forever2056 wrote. This means that the money was involved in a “staking” protocol that offered a yield based on the tokens they put up, and could not simply be pulled out.
They told Coins2Day that they didn’t know if they would stick with crypto investing after Terra’s losses and advised others thinking of investing in crypto to be cautious.
“Do your own research. Always take profits and take your initial investment back as soon as you make it,” they said.
Another user wrote that they had lost more than $450,000.
“I cannot pay the bank. I will lose my home soon,” the user wrote. Coins2Day could not verify the user’s losses.
Sadness after a major financial loss is nothing new to crypto, which is often high risk and high reward, or even the traditional stock market. And researchers who study the effects of a stock downturn say similar effects are experienced among crypto traders.
While some users were distraught at the precipitous drop in Luna this week, other users found camaraderie in the situation on Reddit, replying to other members of the forum and telling them that the best thing is to move on to the next project.
“Sell, save the money that you can and just build up your savings,” wrote one user. “Come back later, crypto isn’t going anywhere. Except LUNA probably won’t be there tho.”
May 12, 2022: This story has been updated to clarify that Luna is a cryptocurrency.
