ABC has a good article
However, Terra (UST) is an “algorithmic” stablecoin — whose value is backed by a "sister" token called Luna, which is run on pre-programmed "smart contracts".
When Terra dips below $US1, it can be swapped for Luna tokens (at a small profit). In theory, that's meant to keep the value of both stable.
It's basically like printing money out of thin air, through a complex mix of "smart contracts" — to make sure the value of each UST token stays as close as possible to $US1.
But the problem was that these complex algorithms somehow failed spectacularly.
Ms Wade said, as part of this complex plot, the buyers appear to have purchased around $1 billion worth of UST stablecoins, while "shorting" bitcoin (which is a risky way to make money, by betting on the price of an asset falling — instead of rising).
"What they did next was they timed the market.
"So obviously we're in a really volatile risk-off stage of the market — because of everything that's been happening with the [US] Fed and the macro environment.
"They waited until a Saturday night when [trading] volumes were very low, and there were no bids.
"And then they went into a trading pool and started selling UST in massive volumes, which then triggered all of the subsequent selling in a low-volume market that broke the [US dollar] peg.
"Inside the algorithm was what our team had identified as a 'death spiral' ... the selling starts to feed on itself from the mechanics of the algorithm.
"So when the death spiral kicked in ... the algorithm started selling Bitcoin and Avalanche [another cryptocurrency], which triggers more selling.
Luna was impacted because it's the underlying [backer] of the UST. So every time a UST [token] is bought, a Luna [token] is burnt, which means there's less tokens in supply, so the Luna price goes up.
"The reverse applies when people start selling. So every time someone sells a UST, they mint a Luna, which means there's more volume.
"And if there's no buyers and the price goes down, then it starts to feed on itself, because people start panicking and selling Luna.
"This was an exploitative trade that took advantage of the fact that markets are weaker. The perfect storm was nobody stepping up to buy the bitcoin and the UST".