(Kitco News) — A brief attack has crashed the Terra LUNA plane by more than 97 percent over the past few days. This caused a similar drop in the price of floor tanks, which fell to 2 cents early Thursday.
That’s according to Ronald Angsey, senior vice president of Intellabridge Technology, a challenge company. AngSiy spoke with David Lin, Kitco News anchor and producer.
UST, Terra’s stablecoin, is supposed to have a one-to-one peg to the US dollar. In this ecosystem, the user can always exchange the LUNA token for floor cabinets at a fixed price of $1, and vice versa. This trade-off can occur even if the market prices for the LUNA and UST differ by $1.
This in turn creates an opportunity for arbitrage. If the floor locker market price rises above $1, LUNA users will be incentivized to trade $1 of LUNA for the newly minted UST token.
This process automatically destroys some of the LUNA from circulation. This, in turn, reduces the supply of LUNA and increases its price. At the same time, newly minted floor locker codes are increasing supply and decreasing the price of floor lockers, bringing it back to $1.
However, this algorithm has been threatened by alleged speculative attacks.
“Through the on-chain analysis, we saw that there were two entities that, over a 24-hour period, sold more than $400 million in terrestrial vaults,” AngSiy said. “…This has caused a cascading liquidation effect in the entire ecosystem and caused a crisis of confidence in it.”
AngSiy did not slur the words: “This is clearly a short attack… The timing of this attack coincides with several things. One of them is, [yield protocol] For an anchor protocol from 20 to 18.5 percent, that was a bit of a media headline. Another one is having a lot of primary competitors online this summer…and third, the very specific timing, which happens after the Terra has moved a lot of its ground tanks away from the curve. “
Without accusations, AngSiy referenced Justin Sun’s tweets before the collapse of the underground tanks. Sun tweeted that he had “secret plans” regarding the underground tanks. However, AngSiy also said that nothing illegal happened, and that the cryptocurrency is open to short attacks due to it being unregulated.
AngSiy drew an analogy to George Soros’ short selling at the Bank of England in 1992: “[Soros] It was just the catalyst that caused huge sterling sell-offs from various currency dealers…so in this [UST] Scenario, they simply started attacking Tiera. And after that, there were a lot of people who sold out normally.”
Do Kwon, founder of Terraform Labs, previously purchased Bitcoin to help stabilize the UST ecosystem.
However, according to AngSiy, the recent crash of UST and LUNA is also linked to the recent bitcoin price crash.
“The Bitcoin massive sale was part of a way to stabilize UST, as a way to force Terra to use her Bitcoin reserves. Once Terra loaned her Bitcoin to an entity for use to buy UST, that entity took all the Bitcoin she received from the loan and shorted the entire amount.”
Reflecting on lessons learned from cryptocurrency investors, AngSiy said,[To] be seen [LUNA and UST] It was removed in a couple of days, well, it should make you take a step back and re-evaluate what is actually safe in cryptocurrency. Is the whole thing a giant startup with an incredible risk profile, usually dedicated to venture capitalists? “
To see AngSiy’s predictions for the future of stablecoins and which cryptocurrencies he is buying, watch the video above.
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