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So we can establish that Terra's ridiculously high 20% yield was only sustainable so long as investors continued to put massive amounts of money into the protoc
by randomran01234 4y ago
So we can establish that Terra's ridiculously high 20% yield was only sustainable so long as investors continued to put massive amounts of money into the protocol, but if a de-peg ever occurred it would create a death spiral that would send it nearly to zero and collapse the entire system. Let this be a signpost for future investors to avoid high yield promises and assume it comes with extreme risk.
But the comments here are wrongly equating Terra to the rest of crypto such as ETH, and assuming everything will collapse just the same. The value of ETH is not that the price will go up or provide predictable yield - its primary use is as a gas token in order to interact with the network, like trading any token or depositing value in a smart contract. The price of this fuel can go up and down, but the asset will always remain in demand for as long as people still wish to continue to do these things on the network.