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They gave away most of their reserve, over a billion in BTC to "professional market makers" to defend the peg - people realized and are now dumping LUNA, the co
by Mo3 4y ago
They gave away most of their reserve, over a billion in BTC to "professional market makers" to defend the peg - people realized and are now dumping LUNA, the counterpart to the peg.
To make matters worse, the algorithm effectively mints new LUNA diluting the supply if the peg breaks downwards.
It’s a closed feedback loop of death right now.
- dragontamer 4y agoThis mistake literally killed TITAN / IRON a few months ago. Did nobody learn from that?
- Mo3 4y agoI’ll go ahead and assume that is a rhetorical question
- dragontamer 4y agoLol. Fair point. I guess my overall question is: what did UST / LUNA do differently to try and mitigate the problem that was proven in IRON / Titan?
- Mo3 4y agoWell, depends on who you ask, but in my humble opinion they managed to do everything as bad or even worse. Titan was backed by some percentage of USDC and Titan itself, while Luna managed to be even more abominable: Backed by BTC and Luna, ensuring full exposure to 100% of market volatility and the highest possible system leverage, and then STACKING LOANS using the reserve BTC as collateral to generate even more system leverage! It’s phenomenal.