Within the last 24 hours, its market cap dropped from above $40 billion to just $500 million, fallen by more than 99 per cent and leaving investors nowhere to go.
Terra was once ranked among the top 10 most valuable cryptocurrencies.
It dropped below $1, having peaked close to $120 last month, reports Independent.
“I lost all my life savings. Had bought Luna at $85, not sure what to do,” wrote a Terra investor on Reddit community forum.
Another investor lost $15,000 after failing to sell it when it was trading above $100 last month.
“I got greedy hoping to get more money so I can at least afford a downpayment for a house for my family. I guess no house and savings then,” the user posted.
Another user on the Reddit forum posted that “I lost over $450,000, I cannot pay the bank, a while another said: “I will lose my home soon. I’ll become homeless.”
Crypto exchange Binance temporarily suspended withdrawals on Terra.
Do Kwon, who founded Terra creators Terraform Labs, tweeted: “I understand the last 72 hours have been extremely tough on all of you – know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this.”
Terra said that the “prevailing peg pressure on $UST from its current supply overhang is rendering severe dilution of $LUNA”.
Terra has adopted UST as a stablecoin which is linked to an underlying asset, such as gold or US dollar.
“The primary obstacle is expelling the bad debt from UST circulation at a clip fast enough for the system to restore the health of on-chain spreads,” it tweeted.
It proposed to burn the remaining UST in the community pool.
“TFL will burn the remaining 371 million UST cross-chain on Ethereum. TFL just staked 240 million $LUNA to defend from network governance attacks,” it added.