A rising star that was ranked among the top ten Cryptocurrencies collapsed in a matter of a few days shocked the world. It was every investor’s nightmare, as Terra’s native token, Luna fell by 97.5% in a few hours from $80 to a mere 0.0004 cents in a few days. For those that invested in Luna and the Terra ecosystem, my heart goes out to you in these difficult times. It is also my regrets and apologies that I have recommended Anchor protocol as a passive income stream before. Even deep research and conviction did not help in this situation. To understand what caused the collapse, we have to take a look at the mechanism in place. What happened? The initial cause of collapse was due to the depegging of Terra’s stable coin, also known as UST. Stablecoins are usually pegged to a dollar in a 1:1 ratio. However, UST uses algorithms for the...