Unchained Did Someone Deliberately Attack Terra/Luna to Kick off a Death Spiral? - Ep.351
May 13, 2022
Jon Wu, head of growth at Aztec Network and a key voice in the Terra/Luna ecosystem, dives into the recent chaos surrounding $UST and $LUNA. He discusses how a Bitcoin short may have triggered the depeg and posits it could have been a deliberate attack. Wu draws parallels between the project’s mechanisms and traditional financial entities, explaining the implications of low liquidity and governance challenges. Despite the turmoil, he shares his belief that algorithmic stablecoins aren’t finished yet and offers insights on the future of $ ext{LUNA}$ and $ ext{UST}$.
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Terra's Vision
- Terra was designed as a decentralized stablecoin payments platform, similar to Visa.
- It supported multiple fiat-backed stablecoins and aimed to replace conventional platforms.
UST and Luna Linkage
- UST and Luna's values were linked, allowing UST to be redeemed for $1 worth of Luna.
- This mechanism, similar to exchanging Visa coin for Visa shares, aimed to maintain UST's peg.
Degenbox Incident
- A previous UST de-pegging incident involved Abracadabra, a DeFi lending platform, and Degenbox, a strategy leveraging Anchor's fixed yields.
- Recursive lending and cascading liquidations led to a rapid UST de-pegging and foreshadowed the current crisis.
