The collapse of LUNA and the algorithmic stablecoin UST in 2022 still sparks huge debate. One of the most common questions is:
Was it a “natural” crash, or a planned attack because UST became a threat to the dollar and the financial system?
Let’s try to answer this without emotions, myths, or naivety.
1️⃣ What was UST really?
UST was not an ordinary stablecoin:
❌ It had no bank reserves
❌ It was not backed by US government bonds
❌ It was not regulated by any government
It was algorithmically tied to the dollar, and its stability relied on a mechanism of burning and minting LUNA.
Additionally:
Anchor Protocol offered ~20% APY
TVL reached tens of billions of dollars
Capital flowed globally, outside the banking system
👉 This was not an attack on the US dollar as a reserve currency
👉 But it was a real financial experiment beyond institutional control
2️⃣ Was LUNA a threat to the dollar?
Not on a macro scale.
USD is a global currency backed by:
The US economy
Debt
Military power
Banking system
UST could not replace any of that.
⚠️ However…
UST was a threat to:
Traditional stablecoins (USDT, USDC)
The narrative that “only regulated money is safe”
Control over capital flows
And that was enough to make it a target.
3️⃣ Was there manipulation?
This is key.
✅ Facts:
There was a coordinated sale of massive amounts of UST
LUNA and BTC were simultaneously shorted
Attacks happened during low liquidity periods
The algorithm’s known mechanism was fully exploited
This was not a retail panic.
It was a professional market attack.
4️⃣ Who could have done it?
❌ No evidence that:
The US government did it
The Fed was involved
Any state institutions were behind it
✅ Very likely:
Large hedge funds
Players connected to traditional markets
Capital that understood the system’s weak point and exploited it
Financial markets don’t need conspiracies to destroy projects.
All it takes is:
High liquidity
Predictable mechanisms
Greed and lack of safeguards
5️⃣ The most important truth
💣 LUNA didn’t collapse because it threatened the dollar.
💣 It collapsed because it was an ideal target for attack
Too rapid growth
Too much trust
Too simple an algorithm
Too few crisis scenarios
The market did what it always does.
6️⃣ Effects we still see today
After LUNA’s collapse:
A wave of stablecoin regulations began
Algorithmic stablecoins were “narratively burned”
Capital returned to USDC / banks
Fear replaced innovation
This was not a coincidence.
7️⃣ Summary (honest and sober)
✔️ Market manipulation: YES
❌ Evidence of a plot against the dollar: NO
✔️ UST was a threat to financial control, not the USD
✔️ The collapse was logical, not accidental
The market doesn’t forgive idealism.
And LUNA was idealistic.
