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> Luna crashed because people lost trust in it. No. It crashed because trillions of tokens were created rendering each token worthless.

snovv_crash 4y ago
Then why did the total Luna market cap go down? Surely if people still had trust it should have just diluted the token values?
- orangepurple 4y ago
  Both can be true
  - kristopolous 4y ago
    That's not the point here. It's behaviorist. Prices stay changed because the beliefs change. If people had thought this was a sane and reasonable move that didn't really affect things the price would quickly return despite the quantity increasing. The believed durability of the token changed No matter what strategy is to be used to try to repeg it, it will only work if there's faith in the price. Price isn't a thing it's a relationship between people about a thing
    - orangepurple 4y ago
      Price is the expected resale value of a good or service
namdnay 4y ago
You have the chronology wrong. The tokens were created because the price kept slipping, and the more the price slipped the more tokens were printed, the more people panicked etc
seoaeu 4y ago
You have it backwards. The trillions of tokens were created because people lost trust in it. Specifically, the loss of trust instigated the price drop from $1 to ~98¢. That's what started the collapse. Only afterwards did the "death spiral" of minting of more tokens, which degraded trust, which decreased the price, which drove more minting, etc. happen
- stickfigure 4y ago
  There were two coins involved; the overprinting of Luna corresponded with lost confidence in UST. The obvious conclusion is that "algorithmic" stablecoins are bullshit. Whatever fate lies ahead for Bitcoin, it doesn't have this particular weakness. It's not "leveraged" in the same way as Luna/UST.
- lfmunoz4 4y ago
- nwiswell 4y ago
  It's chicken and egg. People lost trust because they knew people losing trust would cause a death spiral, and they wanted to get out before everyone else. It was a fire in a crowded theater. Bitcoin depends on trust, yes, but there's no Damoclean sword like there was for Luna. Some people losing confidence does not necessarily lead to others losing confidence.
  - _carbyau_ 4y ago
    Like toilet paper in a COVID pandemic... people were acting not because of the item itself, but because they knew how "the crowd" would react - a self-fulfilling prophecy.
asimjalis 4y ago
Why were these trillions of tokens created? Wouldn’t that naturally lead to the token’s devaluation?

snovv_crash 4y ago

Then why did the total Luna market cap go down? Surely if people still had trust it should have just diluted the token values?

orangepurple 4y ago
Both can be true
- kristopolous 4y ago
  That's not the point here. It's behaviorist. Prices stay changed because the beliefs change. If people had thought this was a sane and reasonable move that didn't really affect things the price would quickly return despite the quantity increasing. The believed durability of the token changed No matter what strategy is to be used to try to repeg it, it will only work if there's faith in the price. Price isn't a thing it's a relationship between people about a thing
  - orangepurple 4y ago
    Price is the expected resale value of a good or service

namdnay 4y ago

You have the chronology wrong. The tokens were created because the price kept slipping, and the more the price slipped the more tokens were printed, the more people panicked etc

seoaeu 4y ago

You have it backwards. The trillions of tokens were created because people lost trust in it. Specifically, the loss of trust instigated the price drop from $1 to ~98¢. That's what started the collapse. Only afterwards did the "death spiral" of minting of more tokens, which degraded trust, which decreased the price, which drove more minting, etc. happen

stickfigure 4y ago
There were two coins involved; the overprinting of Luna corresponded with lost confidence in UST. The obvious conclusion is that "algorithmic" stablecoins are bullshit. Whatever fate lies ahead for Bitcoin, it doesn't have this particular weakness. It's not "leveraged" in the same way as Luna/UST.
lfmunoz4 4y ago
nwiswell 4y ago
It's chicken and egg. People lost trust because they knew people losing trust would cause a death spiral, and they wanted to get out before everyone else. It was a fire in a crowded theater. Bitcoin depends on trust, yes, but there's no Damoclean sword like there was for Luna. Some people losing confidence does not necessarily lead to others losing confidence.
- _carbyau_ 4y ago
  Like toilet paper in a COVID pandemic... people were acting not because of the item itself, but because they knew how "the crowd" would react - a self-fulfilling prophecy.

asimjalis 4y ago

Why were these trillions of tokens created? Wouldn’t that naturally lead to the token’s devaluation?