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[notes/terra-crash][s]: small update with the ultimate death spiral result plus some more links.

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Rufus Pollock 2022-05-13 22:47:41 +02:00
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# Examples of Ordinary People Speculating in Crypto # Examples of Ordinary People Speculating in Crypto
## Re [terra-crash-may-2022](terra-crash-may-2022.md) - 2022-05-11
https://twitter.com/joshmanmode_/status/1524884925178171392
![](../assets/Pasted%20image%2020220513223243.png)
![](../assets/Pasted%20image%2020220513223252.png)
## 2022-05-10 - panic selling in [terra-crash-may-2022](terra-crash-may-2022.md) ## 2022-05-10 - panic selling in [terra-crash-may-2022](terra-crash-may-2022.md)
In this thread: In this thread:

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# Terra Crash - May 2022 # Terra Crash - May 2022
Terra an algorithmic stable-coin that should maintain a $1 peg is crashing and has broken its peg (first on sunday 8th May) and then more seriously on 10th May 2022. Terra an algorithmic stable-coin that should maintain a $1 peg is crashing and has broken its peg (first on sunday 8th May) and then more seriously on 10th May 2022. Finally, on Thursday May 12th Luna collapsed to zero, trading ceased on all major exchanges and the blockchain halted.
Terra is just the latest in a long-line of [[notes/algorithmic-stablecoins]] that have failed (no long-lived such product exists).[^1]
[^1]: For a history of failed algorithmic stablecoins see https://twitter.com/moo9000/status/1523958008782458881
# History
Work in progress. Contributions welcome!
## Tuesday May 12th
The organization is liquidating large amounts of bitcoin (over $2bn) to try and defend the beg which illustrates the potential contagion risk in the crypto ecosystem. The organization is liquidating large amounts of bitcoin (over $2bn) to try and defend the beg which illustrates the potential contagion risk in the crypto ecosystem.
@ -35,4 +45,31 @@ https://twitter.com/hasufl/status/1523803732173103107
https://twitter.com/lawmaster/status/1523844709319327744 https://twitter.com/lawmaster/status/1523844709319327744
> There is a rumor spreading about Jump, Alameda, etc. providing another $2B to “bail out” UST. Whether this rumor is true or not, it makes perfect sense for them to spread. The biggest question here is, even if they can get it to $1 by some miracle, the trust is irreversibly gone > There is a rumor spreading about Jump, Alameda, etc. providing another $2B to “bail out” UST. Whether this rumor is true or not, it makes perfect sense for them to spread. The biggest question here is, even if they can get it to $1 by some miracle, the trust is irreversibly gone
## Misc
https://coinmarketcap.com/currencies/terra-luna/
https://coinmarketcap.com/gravity/post/312631483
> $LUNA There should be some legal action against something like this. 80% drop in 1 week?? Do you think the SEC is going to look into this?
### Bloomberg unclear "why all of Terra's carefully-planned mechanisms failed to work"
https://www.bloomberg.com/news/articles/2022-05-11/-everything-broke-terra-goes-from-defi-darling-to-death-spiral
> Exactly why all of Terra’s carefully-planned mechanisms failed to do their job remains unclear, and conspiracy theories abound about shadowy actors with untold wealth to play with. But one thing’s for certain: Kwon isn’t going down without a fight.
Ed: find this astonishing. There is an obvious reason why belief equilibria can collapse in situations like this. What's there to work out?
# Do Kwon tweets ...
### May 11 - final effort
Best analysis is in https://www.bloomberg.com/opinion/articles/2022-05-11/terra-flops
https://twitter.com/stablekwon/status/1524331171189956609
> 1/ Dear Terra Community: