Stephanie Douse 
A report has revealed that several major Terra investors withdrew their holdings while retail investors continued to accumulate amid the crash.
Some of the blockchain’s largest holders liquidated their holdings just as the UST stablecoin began to depeg in early May. Jump Capital – a major Terra investor reported.
On the other hand, smaller wallets continued to accumulate. Jump noted that series of significant withdrawals and swaps in a UST liquidity pool triggered the depegging.
Terra’s Anchor Protocol, which saw a flurry of withdrawals when UST first began depegging, was also a major source of outflows. Jump referenced on-chain data in the report.
Terra crash was driven largely by Anchor Protocol
Jump cited a recent report from on-chain analytics firm Nansen, which identified seven main wallets as the source of Anchor’s outflows. But these seven were part of a larger trend.
Wallets with more than $1 million in Anchor deposits, which Jump referred to as “large” depositors , reduced their holdings on the platform by more than 40% during the initial depegging.
Small depositors, on the other hand, who have less than $10,000 in their Anchor wallets, increased their holdings on the platform during this time. However, because they only accounted for a fraction of overall liquidity, this demand had minimal impact on LUNA and UST prices.
Given that 70% of UST liquidity was locked into the platform. Anchor Protocol was essentially the ground zero of the Terra crash. The platform’s imbalance between depositors and borrowers also played a role in its eventual downfall.
Poor crypto perception and high rate played a part in crash
Terra’s outflows were exacerbated by the poor crypto sentiment. The depegging occurred following a market crash triggered by a Federal Reserve rate hike. Strong inflation data in the United States also contributed to the drop.
Terra’s crash resulted in the loss of over $30 billion of investor funds in a matter of days. It has sparked outrage from regulators all over the world, and it is expected to lead to stricter crypto regulations.
While Terra has since launched a new blockchain to help restore some value. It appears that the project has lost the majority of its market trust.