UST depeg summary: WHY AND WHAT CAUSED UST DEPEG?

Hint is in Anchor protocol and the status of Curve UST pool. @anchor_protocol @terra_money

@anchor_protocol @terra_money 1/ There were series of notable events that happened during the recent UST depeg event.
In this thread, I will share my thoughts on what caused the depeg.
@anchor_protocol @terra_money 2/ May 7th, 2022. 9 pm was the time that starts the depeg event.

First, UST deposits in Anchor protocol started to exit, which means more circulating UST in the market → sell pressure.
@anchor_protocol @terra_money 3/ Simultaneously, 150M UST was withdrawn from Curve wormhole UST3CRV pool followed by large UST → USDC swap that caused significant imbalance between UST(85%) and 3CRV(15%) in the pool.
@anchor_protocol @terra_money 4/ However, some address made series of transactions to restore the balance in the Curve pool. Here are lists of relevant transactions.
https://t.co/gx9nr7kNcN (05-08-22, 02:30 AM)
https://t.co/bPKhvgfT72 (05-08-22, 02:40 AM)
https://t.co/8Yd056olrL (05-08-22, 03:00 AM)
@anchor_protocol @terra_money 5/ It seems that Terra protocol successfully restored from depegs.

However, one big problem remains. Liquidity decreased a lot in Curve UST3CRV pool. 3CRV tokens were almost drained in the pool compared to week before.

This means, little UST absorption liquidity for downside.
@anchor_protocol @terra_money 6/ This means, little UST absorption liquidity during market downside. This is where bigger waves come in.

On May 10th, 2022, around 17:00, another massive withdrawls of UST initiated in anchor protocol. $0.8B withdrawls during one hour.
@anchor_protocol @terra_money 7/ Here, Luna price also dropped significantly which caused massive liquidation events in borrower side of anchor protocol.

This generated negative feedback loops where Luna price dropped more drastically.
@anchor_protocol @terra_money 8/ With UST price falling, massive swap from UST to 3CRV tokens took place afterwards.

However, in this time, there weren’t much liquidity left in the curve pool.

Therefore, UST price in the pool also dropped significantly even with a stableswap mechanism.
@anchor_protocol @terra_money 9/ Now, market dule is the last and only mechanism to absorb UST supply in the market.

However, it didn’t take long to congest the on-chain vAMM with high spread fees.
@anchor_protocol @terra_money 10/ Since no more measure left to protect the peg, UST price dropped drastically during today.
@anchor_protocol @terra_money 11/ What’s the lesson?

- Don’t ever grow the protocol with un-sustainable yields. This will trigger fear during downside.
- Be ware of the status of Curve pool and take care of the liquidity there.

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திருவாசகம் என்னும் தேன்

பொருள்:
1.எப்போது ஆரம்பித்தது என அறியப்படமுடியாத தொலை காலமாக (தொல்லை)

2. இருந்து வரும் (இரும்)


3.பிறவிப் பயணத்திலே ஆழ்த்துகின்ற (பிறவி சூழும்)

4.அறியாமையாகிய இடரை (தளை)

5.அகற்றி (நீக்கி),

6.அதன் விளைவால் சுகதுக்கமெனும் துயரங்கள் விலக (அல்லல் அறுத்து),

7.முழுநிறைவாய்த் தன்னுளே இறைவனை உணர்த்துவதே (ஆனந்த மாக்கியதே),

8.பிறந்து இறக்கும் காலவெளிகளில் (எல்லை)

9.பிணைக்காமல் (மருவா)

10.காக்கும் மெய்யறிவினைத் தருகின்ற (நெறியளிக்கும்),

11.என் தலைவனான மாணிக்க வாசகரின் (வாதவூரெங்கோன்)

12.திருவாசகம் எனும் தேன் (திருவா சகமென்னுந் தேன்)

முதல்வரி: பிறவி என்பது முன்வினை விதையால் முளைப்பதோர் பெருமரம். அந்த ‘முன்வினை’ எங்கு ஆரம்பித்தது எனச் சொல்ல இயலாது. ஆனால் ‘அறியாமை’ ஒன்றே ஆசைக்கும்,, அச்சத்துக்கும் காரணம் என்பதால், அவையே வினைகளை விளைவிப்பன என்பதால், தொடர்ந்து வரும் பிறவிகளுக்கு, ‘அறியாமையே’ காரணம்

அறியாமைக்கு ஆரம்பம் கிடையாது. நமக்கு ஒரு பொருளைப் பற்றிய அறிவு எப்போதிருந்து இல்லை? அதைச் சொல்ல முடியாது. அதனாலேதான் முதலடியில், ஆரம்பமில்லாத அஞ்ஞானத்தை பிறவிகளுக்குக் காரணமாகச் சொல்லியது. ஆனால் அறியாமை, அறிவின் எழுச்சியால், அப்போதே முடிந்து விடும்.

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