Unchained The Chopping Block: Kevin Zhou on Why He Knew Terra Would Crash - Ep.353
May 19, 2022
In this discussion, Kevin Zhou, CEO of Galois Capital and a well-known skeptic of UST, shares his early warnings about the TerraUSD collapse. He explains how the depegging triggered a 'fear cascade' and criticizes the lack of transparency from the Luna Foundation Guard. Zhou delves into trading strategies during the meltdown, revealing how Galois handled the crisis. He also discusses the broader implications for both crypto and traditional finance and the role of regulations in the aftermath, highlighting the perilous nature of algorithmic stablecoins.
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Terra's Insolvency
- Terra's collapse was predictable due to its inherent insolvency and unsustainable mechanics.
- The system's rapid growth, fueled by Anchor's high APY, made it vulnerable to a death spiral.
Galois Capital's Terra Trade
- Galois Capital shorted Luna early on, after withdrawing UST from Anchor.
- They also profited from swing trades based on short-term market imbalances.
Terra's Collapse and Regulatory Scrutiny
- Terra's collapse, fueled by Anchor's unsustainable 20% APY, devastated retail investors.
- This event highlighted the risks of algorithmic stablecoins and intensified regulatory scrutiny.