What caused Luna and UST to plunge?

 The balancing algorithm between Terra (Luna) and UST fluctuated wildly, causing both 

The collapse of UST and Luna caused investors to lose billions of dollars, and affected a series of other cryptocurrencies. Many people question the claims of cryptocurrency developers that they can build a new form of finance, unaffected by uncertainties from banks in the traditional financial world.

What are stablecoins?

Cryptocurrencies like Bitcoin are volatile digital assets that fluctuate wildly in a very short time just by a tweet from Tesla CEO Elon Musk.

Stablecoins are designed to mitigate that risk. They are digital currencies that are developed on the blockchain and have a stable value, because they are pegged to the value of fiat currencies, such as USD or Euro. In theory, a stablecoin should be worth the equivalent of a dollar, regardless of how other cryptocurrencies fluctuate.

Stablecoins have become a staple of the crypto ecosystem over the past two years, with traders and investors amassing around $180 billion in stablecoins as of mid-May.