Thread (1/N)

#luna played all the #LUNAtics . The $BTC meant to save $UST got pocketed. See my previous thread for a general idea

It appears #lunacoin holders still do not believe they got played. I will go in more detail on where the $BTC reserve went.

Continued.

(2/N)

Begin with 42,530 $BTC that was transferred out of the LFG wallet on May 9th

It got split into 2wallets: 12,350 went to LFT wallet and 30,000 BTC went to OkEX exchange

Bitcoin explorer, bc1qlyfrxkwp2xg39cd6usx6aw45u5rlcgl3sygu2w in block: 735653

(3/N)

Sending $BTC to OkEx was never explained by LFG. Why did LFG send $BTC to OkEx? OkEx shut down all operations in South Korea on April 7th, 2021. So why did $BTC get transferred from a South Korean company to a now defunct crypto platform??

(4/N)

Now let's talk about the 28,250 $BTC that was transferred out. This is the juice bit. Search for Block 735722 and find the cold-chain wallet with control+f: "3M219KR5vEneNb47ewrPfWyb5jQ2DjxRP6"

Bitcoin explorer, block: 735722

(5/N)

All of a sudden, 28,250 $BTC became 41,229 $BTC. Where is the extra 19,006 BTC from? Could it be from OKeX, the now defunct exchange in South Korea??

1/ We have published an amendment to Proposal 1623, incorporating the community’s feedback since its publication 2 days ago. Please see below for details

2/ There are 3 revisions included in this amendment 🧵:

3/ 1. Increasing genesis liquidity:

For pre-attack $aUST holders, post-attack $LUNA holders, & post-attack $UST holders, the initial liquidity parameters have been modified from 15% to 30% to increase token supply at launch & mitigate future inflationary pressures.

4/ 2. Introducing a new liquidity profile for pre-attack $LUNA holders:

Wallets with < 10k $LUNA will have the same genesis liquidity as the above groups (i.e., 30% unlocked at launch), & have the remaining 70% vested over 2 years with a 6 month cliff.

5/ Introducing this new liquidity profile ensures that small $LUNA holders have similar initial liquidity profiles. This would cover 99.81% of $LUNA wallets while only representing 6.45% of total $LUNA at the Pre-attack snapshot.

🧵👇 A compilation of why I believe Do Kwon is, at some level, personally responsible for the UST machine and owes something to people who lost millions in savings.

Not all the blame falls on him but these factors should be factored in ethically, morally, and legally. 🧵👇

1. Basis Cash

Basis Cash was an algorithmic stablecoin very similar to UST that failed due to the death spiral problem. In interviews, Do spoke about Basis Cash as if it was someone else's project. Disclosure to investors that your team's model has collapsed once before matters.

2. Intimate knowledge of the mechanics

"Do Kwon understood exactly why what he built would someday collapse. And then misled people into financial ruin." - @scott_lew_is

Dazzling displays of confidence in a system he knew to be fatally flawed led the layman astray.

3. Speed of personal cashouts

Throughout the last few months, Do cashed out hundreds of millions for "TFL operating expenses". Much of this went to his personal coffer. He encouraged Degenbox to bolster liquidity for the purpose of getting hard cash from LUNA and a little UST.

4. A stabilizing destabilizing BTC reserve

Do made the non-malicious but gravely incompetent move to pull out 3 billion dollars from the LUNA/UST machine into hard money all at once. This reduced liquidity and likely exacerbated the domino effect when everything toppled down.

The EPIC CRASH of Terra is not about it’s mechanism - it’s all about the operation.

In this thread, I’ll talk about the FUNDAMENTAL REASON OF CRASH.

1/ As you all know, the price of UST crashed for last few days. In my opinion, Terra’s price stabilizing mechanisms themselves were not the problem.

In fact, their oracle, onchain market, and Luna staking reward mechanisms are designed very carefully.

2/ Then what’s the problem? It’s their operation policies. TFL launched anchor protocol which gives 20% fixed earn rate, making over 70% of the UST supply reside in anchor deposits.

This means that the demand of UST is totally concentrated on one use-case (14B out of 17B).

3/ As there are more healthy use-cases using UST as a value of $1, the demand graph becomes smoother. On the other hand, if the demand is concentrated on a single use-case, the demand graph becomes stiffer, which is the case for UST.

4/ Stiff demand graph means high price volatility, which means UST had intrinsic weakness in price stability due to its concentrated demand.

Even with the slight depegging of UST would lead to large change in UST demand.

I’ve always tried phrasing my threads as educational know hows, this one is going to have a lot of opinions.

1. Update on Luna/UST coins.
2. Update on Terra Chain
3. “Wasn’t this obvious all along?”
4. It is not all about the Tokenomics™

So much to say, such little sleep.

1) Luna/UST supply changes.

In terms of tokenomics, the game theory incentive came out. So much sell pressure and speed of contraction made Luna “a valuable asset” (as I erroneously called this scenario before).

Owning Luna now yields +999.99% APR (I think the dashboard maxed)

We will table (1 for now). 2) The Terra Blockchain.

A backstop to UST contraction giving Luna sell pressure, is Luna inherent value, as any blockchain token, for the demand of its blockspace.

As long as Validators continue validating, Luna would not go to zero.

I can tell you there is resolute conviction of all nodes and validators to support Terra in the foreseeable future.

Dapps:

Having coded smart contracts in Solidity (for Eth) and Rust (for CosmWasm like Terra), CosmWasm is simply so much more powerful it what it can do.

A lot of man hours has gone into building dApps on Terra. While most Alt L1s I see have merely copy pastes of Uni/Curve/Aave, Terra has some unique apps seen nowhere else. Top of my head, no preference: @angelprotocol let’s you donate money in perpetuity and get tax credit,

Based on the theory story shared by @CryptoHarry_ and @JacobCanfield, Terra Daily would love to share it with you here

There will be two (2) types of information: Data and Rumor

Some transactions were made via the OTC so those are supposed to happen in the past few days

@JacobCanfield 1/ (Rumor) Blackrock and Citadel were the culprits

Citadel is the validator on various chains including Terra (but not now)

Blackrock recently invested in Circle (the institution issuing USDC) - $UST competitor

You can find the announcement

@JacobCanfield 2/ (Rumor) They used leverage to borrow $100K $BTC and divide it into 2 proportions:

+ 25% 25K selling BTC to buy UST

+ 75% 75K selling BTC aggressively and starting to short LUNA

These transactions were reported via OTC (Over The Counter) so we assume they are in (rumor)

@JacobCanfield 3/ (Data) Terraform Labs withdrew $150M from 3pool-UST on Curve Finance in order to prepare the liquidity for the 4pool-UST on Curve as well

By doing this, the liquidity for UST was in shortage.

But this led to a very huge gap in stablecoin

@JacobCanfield 4/ (Data) Immediately after that, $85M was swapped into the 3pool

Therefore, the number of UST increased but the number of USDC decreased, which had led to the unbalanced rate among stablecoins

Plus, this unbalance led to UST depegging to

Blackrock and Citadel. The culprits.

Messing with #LUNAtics was not a good move.

As soon as Blackrock invested into Circle (USDC issuer), $UST became a competitor.

Here is what happened over the past few days (supposedly).

🧵👇

1. Borrowed 100k #Bitcoin

2. OTC deal to sell 25k $BTC to Terra to buy $UST.

3. Sold the remaining 75k $BTC and shorted $LUNA.

4. Dumped some $UST on Curve while liquidity moved from 3pool to 4pool causing de-peg.

5. Contiuously dumped the rest of the $UST on Binance causing a further depegging.

6. FUD spread through-out twitter/reddit (including bot spam).

7. Continued de-peg undermined confidence in $UST causing a bank-run on Anchor, causing $UST to further de-peg.

8. Transaction spam with high-gas requests causing network congestions on Terra.

9. With congestion, borrowers were left unable to repay Anchor loans causing mass liquidations.

10. The liquidation mechanism used in Anchor was emptied causing liquidations to occur at extremely high premiums (Community was unable to make bids for collateral due to congestion).

Why $ust's peg has everything to do with @CurveFinance's #3pool

A thread on $ust's collapse with @dicksonlai_ @GabrielGFoo @themlpx 🧵

@TheSpartanGroup @nansen_ai

#luna

1/ The story begins - believe it or not - with $DAI, and how it maintains its peg.

As a stablecoin backed by collateralized debt positions, the outstanding loans within DAI’s economy play an important role with regard to DAI’s ability to maintain its peg.

2/ When DAI is above peg, borrowers will be incentivized to take more loans with their collateral and sell DAI off on the market.

As a result, this increases DAI’s circulating supply, bringing DAI back to peg.

Vice versa.

Diagram by @dicksonlai_:

3/ However, if we were to observe from DAI’s price chart, it becomes pretty apparent that even after the release of Multi-Collateral DAI (DAI), DAI was still experiencing volatility that went beyond the levels of what a stablecoin should see.

4/
It was only after the deployment of the 3pool that we could start to see the volatility of DAI being managed more effectively.

The improvement was significant; DAI was able to consistently maintain its peg within a much tighter margin of deviation.