Terra The Dust Has Not Settled

Still a tough day for Terra.

15 hours ago, Do Kwon tweeted that a UST recovery plan was about to be announced.

Twelve hours ago, news broke that the Luna Foundation LFG was looking to institutions to raise over $1 billion to support UST. However, according to Larry Cermak, a researcher at The Block, the details of the financing currently known are: LFG is seeking about $1 billion to $1.5 billion in financing. Jump Trading, Celsius and Jane Street have agreed to this financing, and the commitment amount is about $1.5 billion. $700 million, Alameda Research has yet to agree. The condition of the institution is to get the LUNA spot at a 50% price discount, lock the position for one year, and unlock it linearly on a monthly basis after one year. Larry stressed that the financing has not yet been confirmed and everything is subject to change. (At 17:00 Beijing time, Larry Cermak revealed that the plan failed)

8 hours ago, Terra founder Do Kwon announced: The dust is about to settle, everyone hold on.

The dust has not settled, and all efforts are in progress.

Terra Bites tweeted 4 hours ago, here we are, still not sure about all the details, but finding it increasingly convincing that this is a multi-layered economic killer attack. Here we are, some of us have faced reckoning, feeling the pain of those in a similar predicament.

3 hours ago, a community proposal 1164 on “increasing the UST anchor value and increasing the minting capacity to $1.2 billion” was proposed.

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2 hours ago, a Twitter account called “Terra Builders & Community: Planning” (@TerraBuildersU) was created to re-establish the Terra community to kick off the rebirth plan. “In all the history of cryptocurrencies, there has never been an event like this. We are not ruling out Terra surviving as a blockchain, but in any case, we now feel the need to bring people together at this moment .”

At 17:00, Luna continued to bottom out and fell by nearly 90% in just one day. The current price is $3.9. Returning to the glorious history of Luna, Luna climbed to a high of $119.5 on April 5. After 36 days, Luna fell 97%. The UST is seriously off the anchor, once fell to 0.2U, and is currently 0.48U.

BDbkoe54Y30kBrO7apdY7E3ovZySQ3EDQ98mUsO9.pngLUNA trend

KBBegNtPbtFiPhdddWFXqlcHFHJGmxScQcGM5Mnw.pngUST trend

Just now, Terra founder Do Kwon wrote to the Terra community that Terra’s focus has always revolved around long-term time horizons, and another setback in May this year, similar to last year, won’t stop LUNAtics. Short-term mistakes don’t define what you can accomplish. What matters is how you respond. Terra’s return will be a sight to behold. We stop here. We will continue to make noise. The only way forward is to absorb stablecoin supply that wants to exit before UST starts repricing. There is no other way. We propose some remedies to help the peg mechanism absorb supply: we support community proposal 1164, which should allow the system to absorb UST faster.

The dust has not settled.

Layer2 technology company Aztec Network CGO jonwu.eth analyzed that UST may survive, but LUNA will also return to zero. He noted that it doesn’t matter what the total implied value of LUNA is. What matters is the marginal value of each LUNA exchanged for UST and vice versa, the price of LUNA. That is, it is not really scary that the market value of UST is higher than that of LUNA, but that UST is redeemed into LUNA, causing the price of LUNA to collapse:

  • When LUNA price rises: users burn LUNA and mint a lot of UST
  • After LUNA price falls: UST redeems large amounts of LUNA

Suppose the LUNA price is $1 billion, someone burns LUNA and mints $1 billion UST, and LUNA falls to $1, the person can redeem 1 billion LUNA tokens with $1 billion UST, which will result in a Huge amounts of cheap LUNA were sold off in the market. This is exactly what happened today.

Crypto user @CryptoWhale tweeted that LUNA dropped 98% in just 6 days. The founder’s calling his community “crazy” now makes perfect sense. The same fate will happen to Tether, Bitcoin, Ethereum, and countless other overpriced cryptocurrencies. We are still in the early stages of this bear market cycle.

To be honest, UST and LUNA are just a self-destructing system at this point and won’t end until it’s small enough to fix, says Eight Global founder @CryptoMichNL. This means that, in the future, people will not use this system anymore. That means it’s technically over completely.

ElrondNetwork founder @beniaminmincu wrote that algorithmic stablecoins are very difficult. Much harder than people realize. The directional progress that Do Kwon has made is already remarkable. The problem is that all security relies on a highly complex, reflexive, feedback loop. If it works, it’s a genius; if it doesn’t, it’s too hard. For the benefit of the entire crypto ecosystem, a way must be found to temporarily stop the LUNA/UST spiral, re-examine broken architectures, correct misalignments, and set the right incentives to restart a stable feedback loop . This is the best and only option.

Today, some people get rich overnight because of LUNA, and more LUNA community members are in trouble because of the plunge, but in any case, the sun will rise as usual tomorrow, and we also hope that all efforts will bear fruit.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/terra-the-dust-has-not-settled/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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