My $50K Mistake: Why I Lost Everything in Terra Luna

Let me start by saying this: I'm not writing this for sympathy. I'm writing this because I wish someone had told me their Terra Luna story before I made the biggest financial mistake of my life.

Back in early 2022, I was feeling pretty good about my crypto portfolio. Bitcoin was around $40k, Ethereum was holding strong, and I had diversified into some solid altcoins. I wasn't rich, but I had built up about $80k over 5 years of careful investing and trading.

Then I discovered Terra Luna and UST.

The "Genius" 20% APY

The pitch was simple and seductive: park your money in UST (TerraUSD), earn 20% APY through Anchor Protocol. It was supposed to be a "stablecoin" - always worth $1. The 20% return was "sustainable" because of the Terra ecosystem's growth.

I did my research. I really did. Read the whitepapers, watched YouTube videos, joined Discord servers. Everyone was talking about how revolutionary the algorithmic stablecoin model was. Do Kwon seemed like a genius. The math looked solid.

Looking back, I realize I was caught up in the hype. When everyone around you is making money and calling you stupid for not joining, it's hard to think clearly.

Going All In (My First Mistake)

In March 2022, I made the decision that still haunts me. I converted $50k of my portfolio into UST and staked it on Anchor. That was 62% of my entire crypto holdings.

Why so much? The math seemed obvious:

• 20% APY on a "stable" asset
• No volatility risk (it's pegged to $1, right?)
• I could always unstake if something seemed wrong
• Everyone else was doing it

For two months, it worked perfectly. I was earning about $800 per month in passive income. I felt like I had cracked the code. I even started telling friends about it.

The Weekend That Changed Everything

May 7th, 2022. Saturday morning. I woke up to check my portfolio like I always did, and something was wrong. UST was trading at $0.98.

"Just a small depeg," I told myself. "It'll recover."

By Sunday, it was at $0.91. The Terra community was in panic mode. Do Kwon was tweeting about "deploying more capital" to defend the peg. I should have unstaked everything right then.

But I didn't. I believed the narrative. I thought it was just a temporary attack that would be resolved.

The Death Spiral

Monday, May 9th. UST was at $0.70 and falling fast. LUNA was crashing as the protocol minted billions of new tokens trying to restore the peg. I finally tried to unstake my UST.

Too late.

The Anchor protocol was overwhelmed. Transactions were failing. When I finally managed to unstake, UST was at $0.30. By the time I could sell, it was at $0.12.

My $50,000 became $6,000 in three days.

What I Learned (The Hard Way)

The months after Terra's collapse were dark. I questioned everything about my crypto journey. But eventually, I started to process what went wrong:

1. If it sounds too good to be true...

20% APY on a "risk-free" stablecoin should have been a massive red flag. In traditional finance, that kind of return comes with massive risk. Crypto isn't different.

2. Diversification isn't just about different coins

I thought I was diversified because I held Bitcoin, Ethereum, and some altcoins. But putting 62% of my portfolio in one experimental protocol was insane.

3. Community echo chambers are dangerous

The Terra community was incredibly strong and positive. But that made it hard to see the risks. Everyone was making money, so criticism was dismissed as "FUD."

4. Algorithmic stablecoins are experiments

UST wasn't really "stable." It was an experiment in game theory and economics. Experiments can fail, and this one did spectacularly.

Where I Am Now

It's been almost two years since Terra collapsed. I'm still in crypto, but I'm much more careful now. I never put more than 10% of my portfolio in any single asset or protocol. I'm skeptical of anything promising outsized returns.

I've slowly rebuilt my portfolio, though I'm nowhere near where I was before. The Terra loss taught me that in crypto, you can lose everything overnight. But it also taught me resilience.

If you're reading this and considering putting significant money into any high-yield crypto protocol, please learn from my mistake. The 20% APY isn't worth losing everything.

This isn't financial advice. Just one person's expensive lesson shared in hopes it helps someone else avoid the same mistake.