Terra collapses Tether withdrawals terror reigns

Terra collapses Tether withdrawals terror reigns
Terra Collapses Tether Withdrawals Terror Reigns
Terra Collapses Tether Withdrawals Terror Reigns
The death spiral we had to have
I wrote my first story about Bitcoin in 2011. In the 11 years since, I’ve spent a lot of time reading, writing and thinking about cryptocurrency.
So, trust me when I say that the rapid-fire implosion of the LUNA-UST ecosystem is one of the top five most consequential events I’ve ever witnessed in crypto. In the space of 48 hours, roughly US$45 billion of notional value simply disappeared. The Luna Foundation Guard, proud buyers of US$3 billion of Bitcoin last month as “insurance”, were forced to basically sell it all in a failed effort to save the chain.
Who could have seen this coming? Well, lots of people. Hell, the exact mechanism that took LUNA down was publicly mooted by a CFA last November, at which point Do Kwon, LUNA’s founder, publicly ridiculed him.
In effect it wasn’t entirely dissimilar to George Soros’ infamous attack on the British pound in 1992. However, the British pound is backed by, well, Britain, whereas LUNA was backed by an algorithm that responded to negative pressure with a burst of hyper-hyperinflation to put Zimbabwe to shame.
And now you have a worthless stablecoin backed by a worthless blockchain and a convenient narrative for every regulator and crypto skeptic to confirm their long-simmering suspicions about the space. Thanks Do Kwon!
STORY TWO
Cleaning out the stables
The UST fiasco has shone the spotlight squarely on the stablecoins that fuel the crypto market. With numerous UST clones out there – Near, Fantom and Tron all recently got in on the action – enterprising whales began wondering if they too could destroy a blockchain.
While there haven’t been any casualties so far, many stables have temporarily lost their pegs, either in the face of concerted attack, or simply from investors getting the hell out of Dodge.
Tether, the largest stablecoin, was not immune, despite being a fully collateralized (as opposed to algorithm