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It's not really a ponzi scheme. More like an algorithm gone wrong. On basic: if ust coin(pegged to one dollar, so the target was to keep it at one dollar) los

It's not really a ponzi scheme. More like an algorithm gone wrong. On basic: if ust coin(pegged to one dollar, so the target was to keep it at one dollar) lost value(under one dollar) new luna coins were created to buy ust coins. So.. As long ust coin was under one dollar, it created more and more luna coins to buy ust coins. I think luna started with like a few million coins and ended with something like 7 or 8 trillion coins, now the network is officially shutdown. It was a horrible idea. No matter how good your algorithm is, people will manipulate the open! Book of upcoming trades to make profits, and destroying the coin with it. Its like knowing what vanguard bak will do, before they even start trading on top of that you can force them to trade im certain ways, because you know how they will react, with hundred percent accuracy! It was doomed from the beginning.

unmole 4y ago
> It's not really a ponzi scheme. They were paying existing holders a ridiculously high rate for staking. Where was this coming from if not from new buyers?
- jdasdf 4y ago
  the ponzi was really the cherry on top of the flawed algo
- Dylan16807 4y ago
  Paying with luna, right? That's more like a stock split than a ponzi. They weren't going to run out.
  - unmole 4y ago
    Again, why did the price of Luna keep going up if not for new buyers?
    - Dylan16807 4y ago
      The trading price can be based on a lot of factors and/or tiny volumes of trades. The price of a stock can change drastically with almost no money changing hands compared to the market cap. Which would then not be a Ponzi.
      - unmole 4y ago
        1. The supply of Luna kept going up 2. The price of Luna kept going up 3. Volumes were massive
        Dylan16807 4y ago
        When the algorithm was coded, they didn't know those things. It could have worked equally well with minuscule volume. Supply and price could have multipled by a million with no new investment. A Ponzi uses new investments to pay interest. If it doesn't get exponentially increasing revenue it collapses. Paying someone in more tokens or stock is different. If it collapses, it's for different reasons under different circumstances. It's a lot easier to fabricate market cap than to fabricate cash.
- charcircuit 4y ago
  >Where was this coming from if not from new buyers? Anchor generated revenue in 2 ways. The first is that it collects staking rewards for collateral that was deposited. The second is that it collected interest on the loans it lent to people. Some of what it was able to collect can be attributed to new buyers because an increase demand for UST increases the value of Luna. This combined with more gas fees means that bLuna holders will be paid out more. bLuna is one of the assets which can be used as collateral on Anchor. Even without new buyers there would still be profit that could be awarded to depositors.
- dereg 4y ago
  It is not a ponzi. The 20% they were paying out should be considered a cost of user acquisition paid out by the team themselves. If paying incentives to attract users is a crime, we’d have to shutter most startups. I’m not defending Terra, but we should be precise with our words lest we escape reality ourselves.
  - unmole 4y ago
    Cost of acquisition?! Were the holders investors or customers? Again, how were they funding the 20%?
    - dlubarov 4y ago
      The source of funding was the initial LUNA tokens that were allocated to Terra (or Do Kwon personally?). I think it was broadly understood that 20% yield wasn't going to be sustainable, but was a tool for short-term user acquisition.
- SilasX 4y ago
  Even if that part were a Ponzi, it wasn't related to the core problem with the stablecoin peg algorithm, which was what actually brought Terra down, and which could/would have been targeted regardless of this high yield staking program.
  - unmole 4y ago
    I'd imagine the Ponzi part is what drove the demand for Terra in the first place. Why else would you buy it instead of USDT or USDC?
netheril96 4y ago
> No matter how good your algorithm is, people will manipulate the open! The algorithm isn't good at all. Such catastrophic failure was predicted a few months ago by a lot of people independently. But it is difficult to predict the timing so only few people shorted it at the right time.
throw0101a 4y ago
> It's not really a ponzi scheme. Yeah: > Sick of people calling everything in crypto a Ponzi scheme. Some crypto projects are pump and dump schemes, while others are pyramid schemes. Others are just standard issue fraud. Others are just middlemen skimming of the top. Stop glossing over the diversity in the industry. * https://twitter.com/patdennis/status/1518637225789042688 https://twitter.com/patdennis/status/1518637225789042688

unmole 4y ago

> It's not really a ponzi scheme. They were paying existing holders a ridiculously high rate for staking. Where was this coming from if not from new buyers?

jdasdf 4y ago
the ponzi was really the cherry on top of the flawed algo
Dylan16807 4y ago
Paying with luna, right? That's more like a stock split than a ponzi. They weren't going to run out.
- unmole 4y ago
  Again, why did the price of Luna keep going up if not for new buyers?
  - Dylan16807 4y ago
    The trading price can be based on a lot of factors and/or tiny volumes of trades. The price of a stock can change drastically with almost no money changing hands compared to the market cap. Which would then not be a Ponzi.
    - unmole 4y ago
      1. The supply of Luna kept going up 2. The price of Luna kept going up 3. Volumes were massive
      - Dylan16807 4y ago
        When the algorithm was coded, they didn't know those things. It could have worked equally well with minuscule volume. Supply and price could have multipled by a million with no new investment. A Ponzi uses new investments to pay interest. If it doesn't get exponentially increasing revenue it collapses. Paying someone in more tokens or stock is different. If it collapses, it's for different reasons under different circumstances. It's a lot easier to fabricate market cap than to fabricate cash.
charcircuit 4y ago
>Where was this coming from if not from new buyers? Anchor generated revenue in 2 ways. The first is that it collects staking rewards for collateral that was deposited. The second is that it collected interest on the loans it lent to people. Some of what it was able to collect can be attributed to new buyers because an increase demand for UST increases the value of Luna. This combined with more gas fees means that bLuna holders will be paid out more. bLuna is one of the assets which can be used as collateral on Anchor. Even without new buyers there would still be profit that could be awarded to depositors.
dereg 4y ago
It is not a ponzi. The 20% they were paying out should be considered a cost of user acquisition paid out by the team themselves. If paying incentives to attract users is a crime, we’d have to shutter most startups. I’m not defending Terra, but we should be precise with our words lest we escape reality ourselves.
- unmole 4y ago
  Cost of acquisition?! Were the holders investors or customers? Again, how were they funding the 20%?
  - dlubarov 4y ago
    The source of funding was the initial LUNA tokens that were allocated to Terra (or Do Kwon personally?). I think it was broadly understood that 20% yield wasn't going to be sustainable, but was a tool for short-term user acquisition.
SilasX 4y ago
Even if that part were a Ponzi, it wasn't related to the core problem with the stablecoin peg algorithm, which was what actually brought Terra down, and which could/would have been targeted regardless of this high yield staking program.
- unmole 4y ago
  I'd imagine the Ponzi part is what drove the demand for Terra in the first place. Why else would you buy it instead of USDT or USDC?

netheril96 4y ago

> No matter how good your algorithm is, people will manipulate the open! The algorithm isn't good at all. Such catastrophic failure was predicted a few months ago by a lot of people independently. But it is difficult to predict the timing so only few people shorted it at the right time.

throw0101a 4y ago

> It's not really a ponzi scheme. Yeah: > Sick of people calling everything in crypto a Ponzi scheme. Some crypto projects are pump and dump schemes, while others are pyramid schemes. Others are just standard issue fraud. Others are just middlemen skimming of the top. Stop glossing over the diversity in the industry. * https://twitter.com/patdennis/status/1518637225789042688 https://twitter.com/patdennis/status/1518637225789042688