2.4 KiB
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.
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.
Terra (LUNA) Collapses 60% as UST “Stablecoin” Drops Below $0.7 - https://u.today/terra-luna-collapses-60-as-ust-stablecoin-drops-below-07
https://blazetrends.com/terra-price-collapses-after-attempt-to-rescue-stablecoin/
A complete collapse of Terra
Rumors of a complete collapse of Terra quickly spread on social media. Nevertheless, the company co-founder, Do Kwon, kept calm. However, the founder had to liquidate a huge number of Bitcoins to save the stablecoin.
Data from monitoring source BitInfoCharts confirmed the huge sales. The balance of the de Luna Foundation Guard went from 70,000 Bitcoin, (worth $2.23 billion), to 0 Bitcoin.
The Luna Foundation Guard did say that they have not sold all Bitcoin and promised to update the community on the current situation.
https://twitter.com/vhranger/status/1523835842573357057
Background
https://www.bloomberg.com/news/features/2022-04-19/terraform-s-do-kwon-s-huge-bitcoin-buys-catch-crypto-billionaires-attention [@shen-regan-2022-king-lunatics-becomes]
Back in Miami, Novogratz sized up Kwon’s pivot to Bitcoin as a reserve asset to back up UST.
“It’s not without risk, right?” he told the audience in his keynote address at the conference. “He’s in this transition right now. The plan is to buy $10 billion worth of Bitcoin. And as that ecosystem grows, that number will grow. That’s all good as long as there’s not a run on the bank.”
Tweets
https://twitter.com/hasufl/status/1523803732173103107
No matter how this ends, I don't want people to call UST decentralized again. Even the little collateral backing it has is intransparent and controlled by a single party. Used to perform discretionary open market operations. This is like 10x worse than the Fed.
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