LUNA and UST are tokens of the Terra network, a blockchain-based project developed by Do Kwon’s Terraform Labs in South Korea.
Fears were circulating regarding Celsius’ financial connections to LUNA and USDT stablecoins. After Terra collapsed, the cryptoverse idea resembled a “Ponzi scheme’.
Most stablecoins were backed by cash reserves, and are supposed to have enough liquid assets on hand to match the value of each coin. However, Terra (UST) was an “algorithmic” stablecoin — whose value was backed by LUNA. Investors rushed to liquidate their digital assets quicker than the "algorithmic" stabilizer could take effect, making their value dropped tremendously in a short period of time.
To well-develop blockchain technology in the financial sector, investors have to identify the cause of LUNA's price crash, understand the characteristics and application boundaries of blockchain technology.