Who’s Behind the UST De-Peg?

Cryptocurrency analyst Nansen analyzed the Terra stablecoin and the incident involving it de-peg.

Algorithmic stablecoins may be dead or may emerge differently. However, the UST will certainly not be able to come back, and there has been a lot of speculation about who did this. Nansen answered this question.

The company identified many investors who soon took advantage of the vulnerabilities and accelerated the death spiral. In particular, Nansen pointed out the following leading causes of the collapse of the this stablecoin.

  • UST funds were withdrawn from Anchor.
  • These funds were then bridged to Ethereum via Wormhole.
  • The wallets swapped the UST for other stables on Curve.
  • After liquidity on Curve got drained, inefficiencies and arbitrage opportunities arose between decentralized and centralized exchanges, which did the rest for UST.

Nansen strongly disagreed with the idea that only one subject caused the Terra stablecoin to lose ground:

“The de-peg of UST could instead have resulted from the investment decisions of several well-funded entities, for example, to abide by risk management constraints or to reduce UST allocations deposited into Anchor in the context of turbulent macroeconomic and market conditions.”

What is extraordinary is that Nansen has identified seven wallets that significantly impact the loss of UST’s pin. Celsius – a centralized crypto staking service provider, is also among them.

According to Nansen’s report, these seven crypto wallets were continuously withdrawn from Anchor on May 7, but these analyses also failed to show whether these wallets were linked to this.

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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