Go read this look into how the fall of TerraUSD took everything from some stablecoin investors

Illustration by Alex Castro / The Verge

The collapse of the TerraUSD stable coin caught the market by surprise. People who invested heavily in the coin to make up for their lost nest eggs are now dealing with the aftermath as they let go of assets to try and make up for their lost money.

One doctor explained how the fall of TerraUSD is affecting his family's future in a report by The Wall Street Journal on Friday.

Keith Baldwin, a 44-year-old surgeon who lives outside New Bedford, Mass., saved $177,000 during the past decade. Last year he took his savings and bought USD Coin, putting it in a crypto account that paid a 9% annual yield.

In April, he moved it into a pseudo-savings account powered by TerraUSD that offered 15%. More than 90% of his savings vanished in a few days when TerraUSD lost its peg to the dollar. Dr. Baldwin said he didn’t know that Stablegains, the startup that managed the account, was converting his USD Coin holdings into TerraUSD. (USD Coin has kept its $1 peg.)

When Dr. Baldwin learned that TerraUSD’s troubles were threatening his nest egg, he scrambled to withdraw his funds from Stablegains. Hours ticked by as the site processed the transfer. By the time they landed at Dr. Baldwin’s newly created account at the Kraken crypto exchange, the coin was trading at just 14 cents.

Dr. Baldwin doesn’t consider himself a crypto enthusiast. He had hoped to spend the money on a house. Now he has been cutting back on expenses so he can still save for his children’s education. “I don’t want to punish our kids for the mistake I made,” he said.

In Argentina, Venezuela, Iran, Iraq, and Nigeria, people looked at the stablecoin as a way to store their funds that could deal with inflation better than TerraUSD. Many of them said they learned about it from the internet, and that they believed in its safety because it was traded on popular exchanges.

A woman from Buenos Aires lost all of her savings in the crash after spending months researching Terra. A man from Pakistan is quoted in the piece as saying that he has nothing left.

We explained the arbitrage between Terra and its sister token Luna that was supposed to keep UST's value pinned at $1 and the Anchor savings protocol attached to it. The holders could make a small profit by burning one of the sister token to balance things out if UST's value moved above or below that mark.

Investing in the Anchor protocol will give you an annual return of nearly 20 percent because it will loan out your money to someone else in return for a certain amount of money, and you will get back the interest on the loan. There were both deposits and interest in UST. It took even longer to get your money out as the value of UST and Luna fell after a large transaction sparked a death spiral.

Terra and Luna are close to a relaunch, which will change the original currency's name to Terra Classic and Luna Classic, in an attempt to become attractive to investors and traders just a few weeks after its collapse.

According to Vice, the industry is showing signs of instability, yet venture capitalists with nowhere else to go are continuing to invest billions in drastic moves.

The Wall Street Journal and Rest of World articles can be found here.