First off, I’d like to say that explosions like this are scary for people who haven’t experienced it, haven’t had any fun, encryption protocols are complex, and I don’t expect people to be able to evaluate them.
Many seasoned LUNA investors understand that there is tail risk, and the probability of LUNA rebounding from this point is higher than 0%. My roadmap would be to raise capital and stake as much UST as possible. The goal should be to become Frax, the current market model has been broken.
Throughout the explosion, I have been keeping a close eye on the data and situation on-chain. This blog is about something I’m looking at all the time and it’s not perfect. I don’t have the full data, I’m logging what I see.
Curve 4pool is expected to launch with FRAX/UST/USDC/USDT and I put this Dune Analytics dashboard together to monitor its growth. As a fan of DAI and MakerDAO, I admit that I am concerned that they will capture billions of dollars in demand and market share.
UST-3pool was dominant at the time and decided to add that information to the dashboard as well.
At this moment, something strange happened in the pool. An $85 million UST-USDC swap left the pool slightly out of balance. Shortly after the $300,000 to $3 million clip began selling on Curve. Based on on-chain data, it’s not obvious to me that this is a single party.
The defender (i.e. Hero #1) is one-sided, which is obvious, bringing the Curve pool back into balance. About 50,000 ETH was sold and another 20,000 was sent to Binance. Keeping the UST peg resulted in hundreds of millions of on-chain ETH sales, who knows how much Binance (the most liquid trading venue) and FTX have.
The argument at the time was that the big players would remain tied to UST. Don’t worry. The address 1st dumping $51 million in stETH to ETH seems a little panicky. This created the largest ETH/stETH price differential (and available arbitrage) since the end of 2021.
The first defense was successful.
Even after the first “successful” defense, the price never really recovered. This makes me think the move has some weaknesses and the situation should be closely watched.
At this time, I contacted the reporter friend who sounded the alarm. “They call me Chick, they call me Bubble Boy” comes to mind. I was told that the problem was fixed and the hook was fixed.
For some reason, no one believed there would be so much sell-side liquidity hitting the market. Quote: “Look at the chart ha, do your eyes really tell you it’s okay?”.
I’m still pretty sure the hook will be protected, and like everyone else, I do rely on the authority’s word – these guys are so smart and rich they must be playing 8D chess!
The second stage is similar to the first stage. Ongoing swaps on Curve — mostly $300k at a time, and usually from addresses that don’t appear to be “malicious,” but some random NFT trader.
That’s when this address (i.e. Hero #2) “solved” the problem with a $250 million blunt hammer. The end of the second line of defense, unlike the first, fell faster than the first line of defense.
As you can see from the chart above, the trend line is rapidly deteriorating. A prominent DeFi founder said (explained) in a chat that “[Company X] must be making a fortune on arbitrage,” apparently forgetting what the word meant.
The scale is starting to get worrisome. Hundreds of millions of dollars are now spent on-chain, treating UST as intrinsically toxic debt — who knows how much more centralized exchanges have.
If you do not exit the position, it is not arbitrage. At the final high, however, there wasn’t that much trade. Prices have calmed down for a while and I think sellers may have run out of UST.
I deleted some tweets out of fear of being attacked by the Luna community. If I’m wrong, I’ll never hear how it ends, but price action is still negative – even if on-chain isn’t terrible for now.
This is when the final attack begins. At this point, on-chain alone, Hero #2 has 580 million unsellable UST in its addresses.
When $0.98 was protected by hundreds of millions on Binance, it was clearly over. The little tick in the middle of the red line is a quick loss of about $80 million.
Hero #2 put another $200 million in their wallet, but only for a fraction. They know it’s over, obviously too little.
Now the price has recovered from $0.62 to $0.83 (now lower).
If this is the result of trying to sell more than 1 billion from the LFG treasury, I think it looks futile. The battle is lost and all available collateral is needed to survive to another day. Binance has set a floor of $0.70, which is ridiculous but okay.
It would take $350 million just to bring the curve pool back into balance, what if transactions don’t stop?
If the market is positive in the next few months, Luna may survive – in my opinion, the market continues to be depressed and LUNA will continue to deteriorate (as reported by THE BLOCK researcher LUNA is in talks for a new round of financing) failed).
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/ust-and-luna-crash-navigation/
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