The LUNA Disaster Has Started A Discussion Over The “True” Decentralization In Crypto Space
The LUNA Disaster Has Started A Discussion Over The “True” Decentralization
The meltdown of Terra’s LUNA token, which caused the whole crypto market to plummet, has brought the decentralisation argument back into the forefront.
The algorithm between the UST stablecoin and its sister token LUNA came crashing down due to the concentration of enough market influence in the hands of a few. Not only has UST dropped from $1 to 30 cents, but LUNA has also dropped 99.99% in value as of the time of writing this post. LUNA has dropped from over $80 to less than $1 in less than a week.
There’s been a lot of crypto forces to try to figure out who caused UST and LUNA to collapse into a death spiral — from Cardano founder Charles Hoskinson claiming that crypto exchange Gemini may be to blame, to Terra founder Do Kwon’s previous failed crypto projects lately coming to light.
Someone appears to have purchased about $1 billion worth of UST stablecoins while shorting their Bitcoin holdings, whether it was one major whale or collusion amongst large hedge firms.
The Terra-based Anchor protocol has seen massive withdrawals. Over the span of one weekend, deposits dropped from $14 billion to $11.2 billion.
The combination of existing bad market sentiment and new FUD created ideal circumstances for a big run, as investors hurried to withdraw their funds.
The value of LUNA fell as the price of the UST stablecoin fell owing to the huge decline in demand, forcing UST to lose its peg.
Many are comparing the way in which the operation was carried out to George Soros’ early 1990s bet against the British pound. According to one estimate, the rug-pull will cost over $800 million. As of yet, no one knows who is responsible for the attack.
The Terra LUNA crisis raised several concerns regarding the stability of crypto assets. While many feared a fall, the project received the support of high-profile investors like as Galaxy Digital, Coinbase Ventures, Pantera Capital, and others to back up its credibility.
The impact of the collapse of LUNA and UST has been linked to the worldwide financial crisis of 2008. The collapse of LUNA and UST has wiped off more than $830 billion from the overall market capitalization of the crypto industry.
Not only have the tokens lost value, but so have the more than 100 projects that make up the Terra ecosystem, including as NFTs, DeFi platforms, and web3 apps.
Regulators have taken advantage of the situation to emphasize the dangers of crypto assets. Many are warning of a wider influence on financial markets, as many major corporations now have Bitcoin and other crypto assets on their sheets.
With venture investors reassessing their risk tolerance, Terra’s price meltdown threatens to put an end to the fund-raising run that crypto firms were counting on.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Join CoinCu Telegram to keep track of news: https://t.me/coincunews
Follow CoinCu Youtube Channel | Follow CoinCu Facebook page
Hazel
CoinCu News
Author
The LUNA Disaster Has Started A Discussion Over The “True” Decentralization
The meltdown of Terra’s LUNA token, which caused the whole crypto market to plummet, has brought the decentralisation argument back into the forefront.
The algorithm between the UST stablecoin and its sister token LUNA came crashing down due to the concentration of enough market influence in the hands of a few. Not only has UST dropped from $1 to 30 cents, but LUNA has also dropped 99.99% in value as of the time of writing this post. LUNA has dropped from over $80 to less than $1 in less than a week.
There’s been a lot of crypto forces to try to figure out who caused UST and LUNA to collapse into a death spiral — from Cardano founder Charles Hoskinson claiming that crypto exchange Gemini may be to blame, to Terra founder Do Kwon’s previous failed crypto projects lately coming to light.
Someone appears to have purchased about $1 billion worth of UST stablecoins while shorting their Bitcoin holdings, whether it was one major whale or collusion amongst large hedge firms.
The Terra-based Anchor protocol has seen massive withdrawals. Over the span of one weekend, deposits dropped from $14 billion to $11.2 billion.
The combination of existing bad market sentiment and new FUD created ideal circumstances for a big run, as investors hurried to withdraw their funds.
The value of LUNA fell as the price of the UST stablecoin fell owing to the huge decline in demand, forcing UST to lose its peg.
Many are comparing the way in which the operation was carried out to George Soros’ early 1990s bet against the British pound. According to one estimate, the rug-pull will cost over $800 million. As of yet, no one knows who is responsible for the attack.
The Terra LUNA crisis raised several concerns regarding the stability of crypto assets. While many feared a fall, the project received the support of high-profile investors like as Galaxy Digital, Coinbase Ventures, Pantera Capital, and others to back up its credibility.
The impact of the collapse of LUNA and UST has been linked to the worldwide financial crisis of 2008. The collapse of LUNA and UST has wiped off more than $830 billion from the overall market capitalization of the crypto industry.
Not only have the tokens lost value, but so have the more than 100 projects that make up the Terra ecosystem, including as NFTs, DeFi platforms, and web3 apps.
Regulators have taken advantage of the situation to emphasize the dangers of crypto assets. Many are warning of a wider influence on financial markets, as many major corporations now have Bitcoin and other crypto assets on their sheets.
With venture investors reassessing their risk tolerance, Terra’s price meltdown threatens to put an end to the fund-raising run that crypto firms were counting on.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Join CoinCu Telegram to keep track of news: https://t.me/coincunews
Follow CoinCu Youtube Channel | Follow CoinCu Facebook page
Hazel
CoinCu News
Other Posts
Related Posts
Latest
Gavin Wood signals next steps for Polkadot’s revolutionary JAM protocol at sub0 reset
Step into BlockDAG’s Presale Frenzy This November: Secure a Massive 100% Bonus with BDAG100!
Press Release
Gavin Wood signals next steps for Polkadot’s revolutionary JAM protocol at sub0 reset
Step into BlockDAG’s Presale Frenzy This November: Secure a Massive 100% Bonus with BDAG100!
