|
|
|
|
|
|
by w_TF
1484 days ago
|
|
|
Luna/UST was a completely degenerate & risky design; they were allowing 1:1 redemptions between the value of Luna in USD & the UST stablecoin. As the market cap of Luna skyrocketed it allowed for the minting of massive quantities of UST, and then as the price of Luna declined the value of the tokens backing UST was less than what was in circulation and contributed to the death spiral. No amount of demand for Luna block space was ever going to keep this thing pegged. The only thing defending it was open market moves from extremely well capitalized trading desks which is uh decidedly not "algorithmic" nor "decentralized". There's other stable coins with similar mechanisms like Synthetix / SUSD which are also risky, but AT LEAST in their case they require 400% overcollateralization in SNX to mint SUSD. What's shocking is how many people, who ostensibly should be in the top 1% in terms of finance IQ, (e.g., Mike Novogratz, Raoul Pal, etc.) were seemingly unaware of these risks and never examined how it worked while shilling it to retail investors. |
|
|
Not shocking at all, it’s answered in TFA:
> Many of the large firms that invested in and marketed this coin were able to exit before the crash occurred, escaping with massive profits. Strangely, some of these whales felt the need to share this in their comments following the crash. Pantera Capital CIO Joey Krug admitted that they had sold 80% of their Luna position before the crash. Furthermore, Pantera Capital partner, Paul Veradittakit, seemingly bragged that they had turned their $1.7 million dollar Luna investment into around $170 million dollars. Galaxy Digital CEO, Mike Novogratz, wrote in a letter that Galaxy had “booked profits along the way” before the Luna collapse happened.