After the outbreak of the conflict between Russia and Ukraine, a Ukrainian exchanged his life savings equivalent to $10500 for the stable currency Terra (LUNA), which collapsed a few weeks later. Now he has less than $500 left The resident in Kiev, the capital of Ukraine, told the media that he wanted to protect his life savings of about $10500 from currency collapse or other war-related risks.
In March this year, the International Monetary Fund (IMF) sounded an alarm that the war had led to a rise in global food and oil prices. "Rising commodity prices such as food and energy will further push up inflation, eroding the value of income and depressing demand," the IMF wrote in a blog post.
The Ukrainian named Yuri Popovich believes that the cryptocurrency market seems to be developing rapidly, so why not convert his savings into these digital tokens to store their value?
His answer is a cryptocurrency called a stable currency. Theoretically, the stability currency is supported by legal tender and hard assets including government bonds or gold. This is to prevent tokens from becoming too volatile.
"It is impossible and unsafe to store money in the form of paper money," which makes stable money an attractive option, Popovich said.
He chose a stable coin called Terra (LUNA). However, Luna is not a typical stable currency directly linked to hard assets. On the contrary, it is an algorithmic stable currency, which means that it uses the algorithm to link itself to legal tender or assets.
Earlier this month, Luna's algorithm lost its peg to the dollar, and the value of this stable currency plummeted.
Within weeks of Popovich converting his life savings into Luna, the token began to fall freely. As of Tuesday, the value of a Luna was about $0.00017.
A screenshot of Popovich's bank account shows that Luna's collapse wiped out most of his savings, and now his Luna value is less than $500.
Popovich said he suffered "huge" losses, which kept him awake at night and lost nearly 9 pounds. "I often have headaches and anxiety," he said. "My wife doesn't know about it yet. I don't know how to tell her."
Popovich is one of thousands of non professional investors (i.e. retail investors) who have suffered losses from cryptocurrency in recent weeks. Luna's free fall exacerbated concerns about the broader cryptocurrency market, which had been affected by rising interest rates and a tightening financial environment.
According to coinmarketcap, the market value of the global cryptocurrency market has lost about $500 billion since Luna began to disintegrate in early May.