TerraUSD (UST): tokenomics, risks and score
An algorithmic stablecoin that collapsed in May 2022, destroying roughly forty billion dollars of value in under a week and triggering the failures that defined that year.
What TerraUSD is, and what it does
This asset has failed. It is recorded here so that a search returns what actually happened rather than promotional material that is still online.
What the UST token itself does: It held its peg by allowing one UST to always be swapped for one dollar of LUNA. When confidence broke, that mechanism minted LUNA without limit, and both went to effectively zero.
Where it runs: Terra. Mechanism: Algorithmic, backed by a paired volatile token. It has been running since 2020, so roughly 6 years.
The facts
- TICKER
- UST
- SECTOR
- Failed and defunct
- CHAIN
- Terra
- LAUNCHED
- 2020, so around 6 years of operating history
- MECHANISM
- Algorithmic, backed by a paired volatile token
- MAXIMUM SUPPLY
- Was minted and burned algorithmically against LUNA
- VALUE CAPTURE
- None
- UPGRADE CONTROL
- Team controlled
- VESTING
- Complete
- LIQUIDITY BAND
- Micro cap. Thin, often a single venue or pool. Treat the quoted price as indicative only.
How the score breaks down
Each dimension is explained on the directory page, and the reasoning behind it is taught in the Academy research process.
Supply and value capture
Supply expands and contracts by design rather than following a fixed schedule. The token captures no protocol revenue. Any value rests on governance rights, speculation, or future changes that have not happened yet.
It held its peg by allowing one UST to always be swapped for one dollar of LUNA. When confidence broke, that mechanism minted LUNA without limit, and both went to effectively zero.
The founding team retains control over upgrades or parameters. Ownership is heavily concentrated. A small number of wallets hold enough to determine the price on their own.
Where it is strong and where it is not
- None. This asset collapsed in 2022.
- Collapsed completely in May 2022, destroying roughly forty billion dollars
- The algorithmic peg design was reflexive and failed exactly as critics predicted
- Its failure cascaded into multiple lender and fund bankruptcies
- The founder was convicted of fraud
Incident history
Lost its peg in May and entered a death spiral. LUNA supply inflated from hundreds of millions to trillions of tokens within days. Roughly forty billion dollars of value was destroyed and the collapse triggered the failure of several major lenders and hedge funds.
The founder was extradited and convicted on fraud charges in the United States.
Our read
The main risk
This asset failed completely. Anything trading under this name today is a residual claim on a collapsed system.
Before you buy anything
Check the contract address against the project's own documentation rather than a search result or a screener link, since impersonation tokens with identical names and logos are listed constantly. Check the order book depth before assuming you can exit at the quoted price. And write down what would make you wrong before you buy, not after. The Academy thesis module covers why that single habit protects more capital than any indicator.