LogFAQs > #965033065

In all fairness, this issue isn't exclusive to Crypto at all, but Crypto has a tendency to foster nearly cult-like followings for individual coins, and it often results in investors refusing to listen to reason. Nobody with an actual, solid understanding of how Terra Luna and UST worked would've advocated for it. It was clearly going to fail at some point, because the very idea of being backed by another coin that itself is backed by your coin is ludicrous no matter how you try to make the math work.

Luna's value is "stable" because UST is "stable." But UST's "stability" requires Luna being stable. It's such a wildly unstable foundation. As had been predicted by smarter investors, the moment UST de-pegs from the dollar, Luna undergoes massive coin inflation, resulting in quick devaluation, resulting in UST de-pegging further, resulting in even faster Luna inflation. In the end, it all boils down to assuming UST will never de-peg. And that was a real bad assumption to make.

That said, it would be an absolutely brilliant shorting opportunity if you knew what you were doing.