I just saw an in-depth analysis about Do Kwon, and his story is truly worth telling. Once, Do Kwon's net worth exceeded 3 billion dollars, making him a prominent figure in the crypto world. But in just one week, he evaporated 45 billion dollars of wealth from the market. What exactly happened behind the scenes?

Do Kwon is a South Korean entrepreneur, a Stanford computer science graduate, who previously worked as a software engineer at Apple and Microsoft. In 2018, he founded Terraform Labs, which raised tens of millions of dollars from several major exchanges and investment firms during its funding stage. He has big ambitions, aiming to create something completely different.

In 2020, Terraform launched TerraUSD (UST), an algorithmic stablecoin theoretically pegged 1:1 to the US dollar. The entire mechanism sounds clever: UST is backed by the LUNA token, maintaining price stability through burning and minting tokens. But there’s a problem— to create the illusion of a thriving ecosystem, they artificially generated a large number of fake transactions on-chain, making outsiders think there was real user activity. This operation was indeed a bit excessive.

Do Kwon himself was very confident, even daring to accept a $1 million bet before the crash, betting that LUNA wouldn’t fall that low, and boasted that UST would never depeg. But what happened? Reality slapped him hard.

Starting in May 2022, Terra’s Anchor Protocol began lowering interest rates on stablecoin deposits. This directly caused a large number of depositors to withdraw, and demand for UST plummeted. The key issue was that their burning and minting mechanism was already too slow, plus exchanges paused withdrawals, causing the entire system to start failing. LUNA’s supply kept being diluted, and its price kept falling.

The depegging of UST became more severe, and the automated market makers in Curve pools offered bigger and bigger discounts to attract arbitrageurs. The final result was UST completely lost its peg to the dollar, and LUNA’s price also plummeted. An empire once valued in billions collapsed within a week.

Looking back now, Do Kwon’s net worth has long returned to zero. LUNA’s price now hovers around $0.07, which in itself says everything. This story teaches us that no matter how clever the algorithm or how grand the vision, if built on false foundations, it will ultimately face market judgment.