The 7 Terra Wallets Could Be Responsible For The Massive UST Depeg

According to a Nansen investigation, UST’s depegging was most likely triggered by seven well-funded wallets within the Terra ecosystem. The wallets took UST from Anchor on Terra, transferred funds to Ethereum via Wormhole, and exchanged considerable sums of UST for other stablecoins in Curve’s liquidity pool.

Seven wallets within the Terra ecosystem may have triggered the enormous TerraUSD (UST) depegging that drove LUNA’s price slide with the broader Bitcoin and crypto markets.

According to a report by the Nansen team, on-chain data examined between May 7th and May 11th revealed that the seven well-funded wallets removed UST from the Anchor protocol on Terra first. 

The money were subsequently sent to Ethereum via Wormhole, where they were exchanged for other stablecoins in Curve’s liquidity pools. Concurrently, the latter protocol was experiencing a lack of liquidity, and swaps to other stablecoins initiated the UST depegging process.

As UST began to lost its peg, the seven wallets took advantage of arbitraging inefficiencies between Curve, Decentralized exchanges, and Centralized exchanges. Concerning centralized exchanges, the entities behind the seven wallets decided to unload their UST through Binance.

According to Nansen’s report, the seven wallets are as follows:

• 0x8d47f08ebc5554504742f547eb721a43d4947d0a (EIP 1559 User): On May 7th, 85 million UST were bridged to Ethereum and subsequently swapped on Curve for about 84.5 million USDC.
• 0x4b5e60cb1cd6c5e67af5e6cf63229d1614bb781c (Celsius): On May 7th, 175 million UST were transferred from Terra to Ethereum. It then sent 125 million UST to Curve, which was subsequently converted to USDC in 25 million increments.
• 0x1df8ea15bb725e110118f031e8e71b91abaa2a06 (hs0327.eth): The wallet converted 20 million UST to Ethereum on May 8th.
• 0xeb5425e650b04e49e5e8b62fbf1c3f60df01f232 (Heavy Dex Trader): On May 8th, this wallet got about 10.5 million UST, which were then exchanged for USDC on Curve.
• 0x41339d9825963515e5705df8d3b0ea98105ebb1c (Smart LP: 0x413): which bridged 20 million UST on May 8th before being traded for USDC on Curve
• 0x68963dc7c28a36fcacb0b39ac2d807b0329b9c69 (Token Millionaire / Heavy Dex Trader): On May 8th, it exchanged about 30 million UST for USDC on Curve.
• 0x9f705ff1da72ed334f0e80f90aae5644f5cd7784 (Token Millionaire): It completed numerous transactions between May 8th and 9th, transferring a total of 60 million UST to Ethereum.

The Nansen investigation concluded that the UST depegging event could not be traced to a malevolent person or organization. It stated:

This on-chain study refutes the narrative of one “attacker” or “hacker” working to destabilize UST. Instead, we found that a small number of players identified and arbitraged vulnerabilities – specifically in relation to the shallow liquidity of the Curve pools securing the UST’s peg to the other stablecoins.

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.

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Patrick

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