In May 2022, many of us heard some bad news: the Terra (LUNA) crash. Like many others, people close to me lost their life savings.
After relying on a protocol that seemed to have come to compete with blockchains like Ethereum (ETH) and Solana (SOL), these girls learned a valuable lesson.
Terra: a seductive technology before the crash
Let’s first know the story of Cassandra, a Marketing employee who almost lost everything thanks to the Terra crash.
It was 2021, and she had worked for that technology company for about two years. The company had several projects running on blockchainBlockchain is a type of database storing an immutable set of data, verifiable to anyone with access to it —through..., and a new project called Terra caught their attention.
Terra’s idea was to offer a high-speed infrastructure for deploying DeFi applications. At the same time, that blockchain would house its LUNA token and a series of algorithmic stablecoins.
Several of the company’s projects would be possible thanks to Terra, which had its own blockchain.
Like his peers, she found the Terra project quite solid and exciting. His smart contracts that allowed the development of Dapps and other functions became popular. Staking would be the function of Terra that the company would be most interested in.
Cassandra’s project at the time based all of her marketing on the interest they could earn with Terra’s staking. For staking, they would use UST, Terra’s algorithmic cryptocurrencyA digital currency running on a blockchain and built with cryptography. Contrary to central-bank issued currency, cryptocurrency issuance rules are..., which used LUNA to maintain its parity with the dollar. But, with an APY of 21%, the only way to win large amounts of money was by staking significant sums.
The lucky mistake
It had been a year since her mother had suffered an ophthalmic aneurysm, and she had learned that she should always have savings to serve in any eventuality. The sum of UST that she staked wasn’t big, but she might be able to help them because a stitch in time saves nine.
The last months of 2021 were running, and they had passed without eventualities. But, on one hectic day at work, she needed to review the sum she had staked. To his surprise, an enormous amount of money jumped out at his incredulous gaze.
She did the math, and it was impossible for 21% of what he had initially staked to turn into $15,000. So, Cassandra decided to check the walletA crypto wallet is a user-friendly software or hardware used to manage private keys. There are software wallets for desktop... transactions. After reviewing the blockchain with a blockA collection of cryptocurrency transactions. Every few minutes (or seconds, depending on the blockchain) one miner or validator verifies the... explorer, she realized that some funds from the company had been transferred to his account by mistake.
The decision
For a moment, Cassandra hesitated about reporting the mistake and keeping the money. But, her father, who was still alive then, had taught her the value of honesty. So, she immediately reported the case to her superiors.
She made herself available to transfer the funds to where her superiors indicated. After all, she had complete control over the funds since she had in her possession the private keyA cryptographic key that is used with an algorithm to encrypt and decrypt data. A cryptocurrency private key lets you... to the wallet that housed them.
Her superiors confirmed the mistake and were grateful that she had informed them. However, they gave her no immediate instructions on what to do with the money, which was left at stake, mixed with her savings.
If Cassandra had predicted that the Terra crash would occur in a few months, she would surely have converted them to BTCAn abbreviation for Bitcoin., ETH, USDT, and DAI, for example. But she didn’t.
Months passed, and the amount was still in her wallet. Then, perhaps because of her honesty and good work performance, her company decided to help her with the treatment of her father. Unfortunately, he had been diagnosed with cancer.
The Terra crash and losing his job
His father died in February.
Those were the days when Luna Foundation Guard (LFG), with the participation of Jump Crypto and Three Arrows Capital, raised $1 billion for a Bitcoin-denominated foreign exchange reserve for Terra’s UST stablecoin.
Until then, she did not use the funds in her wallet since the company took care of everything, including funeral expenses. Besides, she was too busy caring for her father to keep an eye on that money.
One thing I didn’t mention earlier is that the company she worked for had secured the funds that supported the projects at UST. So, in a nutshell, the company depended on Terra in several ways.
When the Terra crash came in May, her savings disappeared. Easy comes, easy goes. The money that belonged to the company and had come to her by mistake was left too.
The Terra (LUNA UST) crash forced the company to close all its crypto projects, including the project our friend Cassandra was working on.
Savings and a whole future overboard
Around that time, I discovered that a friend of my brother’s, let’s call her Martha, was also severely affected by the Terra crash.
Martha came to Toronto, Canada, to study English. She was 18 years old and originally from Santos, Brazil. Among Martha’s many dreams, she wanted to become an architect, so she traveled to the city to improve her language skills and enroll in college.
Martha took advantage of the fact that her Aunt Harper lived in Toronto. Her aunt offered her accommodation while she processed her architecture studies at the University of Toronto, with the money her parents had scraped together over the years to pay her tuition.
As foreigners, Martha’s parents were looking for an alternative way to protect the money to ensure her daughter’s future. But, since they weren’t tech-savvy, they left everything up to his friend Albert. He had heard about Terra and put the money into UST.
Nothing is certain in life, and in the crypto ecosystem, even less so. Martha lost $114,000 in UST and the opportunity to pursue her dream career. Now, she is looking for a job that can allow her to return to Brazil.
The learned lesson
These are just two examples of the thousands of people who lost their savings due to the Terra crash. If anything is sure, putting life savings into a singular asset is dumb.
Also, trusting someone else’s word to save or invest is one of the biggest mistakes a person can make. Therefore, it’s always necessary to investigate on our own and diversify our cryptocurrency portfolio. Even in a bear market like the current one, it will always be better to have cryptocurrencies like BitcoinBitcoin is the first decentralized digital currency. It was created in 2009, by an anonymous founder or group of founders... More, which have a long history and millions worldwide support it.
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