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It wasn't a ponzi in the traditional sense but the algorithm propping their stablecoin while likely well-meaning had a serious death spiral-based fault in the c

by Tenoke 4y ago

It wasn't a ponzi in the traditional sense but the algorithm propping their stablecoin while likely well-meaning had a serious death spiral-based fault in the case of a coordinated attack or very bad market conditions. For what is worth, they did have a healthy (for smartchains) ecosystem beyond that stablecoin and were clearly attempting to do more than temporarily prop their token and then run away.

raesene9 4y ago
I don't think that Luna or UST were ponzi's but some of the things built on top of them had ponzi-like characteristics. Specifically Anchor which was promising 20% returns whilst charging borrowers less than that on the same funds, seemed doomed to failure.
- cypress66 4y ago
  From what I understand that 20% was completely legit and made sense. It simply came from a reserve that was created to attract investors, and as soon as that reserve were depleted, those returns would be gone.
  - 55555 4y ago
    Okay, now explain the need for a 21 day lock up when trying to pull funds out.
    - charcircuit 4y ago
      There is not a 21 day lock up for pulling funds out. The Terra blockchain is a proof of stake blockchain where you can stake Luna in order to gain rewards from various fees the network collects. Unbonding your staked Luna takes 21 days to complete. One of the assets which you could use as collateral on Anchor is bLuna. bLuna is a token that represents a Luna that is currently being staked. Anyone who holds bLuna is able to redeem the rewards that staked Luna has accrued since it was last redeemed. When you give it to Anchor as collateral Anchor will start paying it's depositors with those rewards. It is possible to convert a bLuna back into Luna, but this takes at least 21 days to complete as the unstaking process takes 21 days itself. If you don't want to wait that long you can just sell the bLuna to someone else for Luna.
  - raesene9 4y ago
    I've not read all of anchor's material but I don't recall them publicly stating that the 20% APY was only going to las till they had burned through a specific amount of money. Do you know, was that stated publicly?

by Tenoke 4y ago

raesene9 4y ago

I don't think that Luna or UST were ponzi's but some of the things built on top of them had ponzi-like characteristics. Specifically Anchor which was promising 20% returns whilst charging borrowers less than that on the same funds, seemed doomed to failure.

cypress66 4y ago
From what I understand that 20% was completely legit and made sense. It simply came from a reserve that was created to attract investors, and as soon as that reserve were depleted, those returns would be gone.
- 55555 4y ago
  Okay, now explain the need for a 21 day lock up when trying to pull funds out.
  - charcircuit 4y ago
    There is not a 21 day lock up for pulling funds out. The Terra blockchain is a proof of stake blockchain where you can stake Luna in order to gain rewards from various fees the network collects. Unbonding your staked Luna takes 21 days to complete. One of the assets which you could use as collateral on Anchor is bLuna. bLuna is a token that represents a Luna that is currently being staked. Anyone who holds bLuna is able to redeem the rewards that staked Luna has accrued since it was last redeemed. When you give it to Anchor as collateral Anchor will start paying it's depositors with those rewards. It is possible to convert a bLuna back into Luna, but this takes at least 21 days to complete as the unstaking process takes 21 days itself. If you don't want to wait that long you can just sell the bLuna to someone else for Luna.
- raesene9 4y ago
  I've not read all of anchor's material but I don't recall them publicly stating that the 20% APY was only going to las till they had burned through a specific amount of money. Do you know, was that stated publicly?