Jump Crypto has revealed the details of the UST and LUNA collapse. Jump Trading’s crypto arm, Jump Crypto, has released a report analyzing the early stages of UST’s de-pegging event. The company, which is heavily involved with the Terra blockchain, stated that it was a small group of whales that triggered the initial price drop of UST.
According to the published report, the de-pegging event started with the execution of various critical operations in the UST/3CRV Curve pool. Within a 75-minute timeframe, Terraform Labs withdrew $250 million UST from the pool.
Meanwhile, two anonymous whale addresses made a $185 million UST swap in exchange for USDC. The transactions greatly reduced the liquidity of the pool and a flurry of activity started inside.
Earlier the same day, one of the whale wallets transferred $108 million UST to Binance. This coincided with rising trading volumes on Binance and worsening liquidity on Curve.
Jump Crypto referred to the wallet that sent the UST to Binance and said they did not know who was controlling the wallet.
Anchor Protocol Detail
Another major reason for the collapse was the massive withdrawals that took place on the Terra-based lending service Anchor Protocol. Thanks to its 19% APY rate, Anchor held 72% of the UST supply in the episode until Terra’s fall.
The decline in the crypto markets during the same period contributed to the divergence of the UST price. Following the Fed rate hike, investors have exited their positions in cryptocurrencies like Bitcoin and UST due to the “risk-free” market sentiment.
In the days leading up to Terra’s collapse, Do Kwon retweeted a tweet that put forward a similar theory about the incident, claiming it was intentional.
Currently, the Terra community has released Terra 2.0, which completely abandons the use of stablecoins.