This Name Foreshadowed the LUNA Collapse Years Ahead!

LUNA: Veteran Ethereum (ETH) developer, investor, and consultant Mariano Conti, former Smart Contracts Manager at MakerDAO, recalled a discussion about Terra (LUNA) design flaws in April 2018. It certainly looks visionary. Here are the details…

Terra’s (LUNA) “death spiral” predicted in 2018

Conti shared on Twitter a statement from his colleague at MakerDAO, Cyrus Younessi. On April 20, 2018, Mr. Younessi criticized the architecture of Terra (LUNA) and its TerraUSD (UST) stablecoin. In a statement quoted by Blockchain veteran Linda Xie, a former Vice President of cryptocurrency exchange major Coinbase, Younessi criticized the idea of ​​supporting UST with the LUNA token alone. In 2018, he compared this design to MakerDAO’s DAI. However, MakerDAO was only supported by the MKR entity. This “single entity” support was very fragile. As two cryptocurrencies – a stablecoin and its “base token” – race towards zero, investors’ panic could easily set off a “death spiral” mechanism.

But if investors panic, the LUNA will fall. Then Terra would continue to fall, and then each would continue to contribute to each other’s death. Younessi was surprised that some teams are still interested in similar designs. Terra’s (LUNA) collapse was painful for the entire industry. Conti also added a statement about Su Zhu of Three Arrows Capital, one of the biggest investors destroyed by the collapse of Terra (LUNA). He claims Zhu “did not realize” how fragile the LUNA/UST ecosystem is.

Earlier As we reported, the TerraUSD (UST) stablecoin has lost its pegged value against the US dollar, thanks to the massive pullbacks from the over-hyped Anchor Protocol (ANC) and the ensuing panic selling. The “death spiral” pushed LUNA and UST prices to near zero. Dozens of cryptocurrency funds with open positions on LUNA have been liquidated.

Terra investigation continues

Following the failure of the TerraUSD stablecoin, South Korean financial regulators conducted “urgent” reviews on local cryptocurrency exchanges. South Korea’s FSC and FSS requested information on transactions related to TerraUSD and LUNA from regional cryptocurrency exchange operators. This included details on trading volumes, closing prices and the number of investors involved. In addition, exchanges were requested to investigate the causes and remedies of the market crash.

Next, the FSS began investigating companies that acted as gateways for payments for digital assets. The FSS questioned 157 payment gateways about their strategies, cryptocurrencies-related services, and disclosure of digital assets. Following the failure of UST and LUNA, South Korea’s national tax authorities reportedly fined Terraform Labs and Kwon $78 million for tax evasion. Legislators invited Kwon to participate in a legal investigation into the events that led to the downfall of Terra and the de-pegging of the UST.

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Larry Brown

I graduated from Yale University, Department of Television. I have been a professional news writer for 3 years. I am continuing my career here by establishing site 3 months ago.