Failed 2022

    Terra/Luna

    Algorithmic stablecoins are inherently fragile. When confidence breaks, the death spiral is unstoppable.

    Founded → Closed

    2018 → 2022

    Funding Raised

    $207M

    Industry

    Crypto/DeFi

    Country

    South Korea

    IdeaProof AI Failure Score

    82/100
    Market Fit RiskBurn Rate RiskFounder Risk
    Market Fit Risk
    50
    Burn Rate Risk
    40
    Founder Risk
    80

    Full Analysis

    Terra/Luna was a blockchain ecosystem built around UST, an algorithmic stablecoin pegged to $1 through a mint/burn mechanism with the LUNA token. At its peak, UST had $18B in circulation and LUNA had a $40B market cap. In May 2022, a large UST sell-off triggered a "death spiral"—$60B in value evaporated in days. Founder Do Kwon was arrested in Montenegro.

    Could This Failure Have Been Prevented?

    IdeaProof's AI validates market demand, competitive positioning, and business model viability in minutes — catching the exact issues that sank Terra/Luna.