luna - Pwim.Net

Terra Founder Do Kwon Agrees to $1M Bet on the Future Price of LUNA

What better way is it for a startup’s founder to spend his money than for him to bet on the success of his project? This could be tagged as the case of Do Kwon, the founder of Terraform Labs, the blockchain startup in charge of the Terra blockchain and LUNA coin.

Do Kwon has just accepted a $1 million bet from a Twitter user named Sensei Algod, a self-proclaimed semi-retired degen who believes the price of LUNA is going to be much lower by this time next year.

Algod announced the challenge through his Twitter account saying, “Who wants to take a $1000000 bet that $luna will be lower price in 1 year than now?” and specifically tagging Do Kwon and other prominent figures in the ecosystem. Kwon simply accepted the challenge saying “Cool, I’m in.”

The daring bet has gotten tongues wagging not just because of the amount involved but also because of the Terra platform’s seemingly impressive positivity in today’s crypto ecosystem.

Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems. According to its white paper, the protocol combines the price stability and wide adoption of fiat currencies with the censorship-resistance of Bitcoin (BTC) and offers fast and affordable settlements.

Based on its features and the superiority of the transactions it facilitates, the Terra ecosystem has seen over $25.33 billion in Total Value Locked (TVL) hosting innovative protocols like Anchor Protocol, Lido, and Astroport, amongst others. The platform’s LUNA coin has also recorded a relatively high and astronomical growth amidst the current market drip. The coin is trading for $91.34, down by just 13.14% from its All-Time High (ATH) of $104.58 inked about 6 days ago.

The increasing demand on LUNA based on the ecosystem built around it has made many projects a more ambitious price target for the coin, and in 12 months we would find out who wins the bet the way Mike Novogratz won a bet of 0.5 BTC on President Joe Biden’s election bet back in 2020.

Terra Erases 12 Months Bullish Gains with 94% Drop in Value

The Terra community is almost in disarray as the ecosystem’s two flagship tokens, including LUNA and UST are on a freefall amid the most bearish sentiment the blockchain protocol has ever seen.

While the algorithmic UST stablecoin has completely lost its peg against the US Dollar, trading at $0.7158 at the time of writing, the stablecoin dropped as low as $0.2998 during the intra-day trading.

LUNA on the hand has shed off all of the gains it has accrued over the past 12 months as it slumped to its 52-weeks low of $0.8384. The fall of the LUNA comes off as a bigger surprise to the crypto world as such a plunge is uncommon, especially for an established blockchain protocol that attained its All-Time High (ATH) of $119.18 barely a month ago.

In his explanation of the cause of the current situation, Do Kwon, the founder of the Terra blockchain protocol said in a tweet that “the price stabilization mechanism is absorbing UST supply (over 10% of total supply), but the cost of absorbing so much stablecoins at the same time has stretched out the on-chain swap spread to 40%, and Luna price has diminished dramatically absorbing the arbs.”

While he did not discount the challenges the next couple of weeks will bring while trying to rebuild the protocol, he promised to be there every step of the way.

Yet, crypto experts believe that the crash of UST would stablecoins are still valuable by playing robust roles in the volatile market.

“It’s important now to acknowledge that Terra is a so-called algorithmic stablecoin, not directly backed by USD. The most popular stable coins like Tether (USDT) and USDC are actually backed by USD in the bank and both of those survived yesterday’s market sell-off well,” Ransu Salovaara, CEO at Likvidi, said.

“The de-pegging will likely result in a substantial regulatory risk – if not for the whole crypto space, then certainly for the stablecoins market. Anto Paroian.” said Chief Operating Officer, at crypto/digital asset hedge fund ARK36.

The promise of Kwon is a very significant one in the broad attempt to return LUNA and UST back to their glory days. While investors are currently doubtful of the next path for the two digital currencies, the scenario playing out now is different from those of Sushiswap when the founder, Chef Nomi rug pulled that he sold off his SUSHI tokens.

Sam Bankman-Fried took over the project at the time and helped it regain its balance. Do Kwon said he is still committed to the recovery of the LUNA tokens and this should come off as good news to those looking to hold the coins for much longer.

“Terra’s return to form will be a sight to behold. We’re here to stay. And we’re gonna keep making noise,” he tweeted.

Bitcoin Hits a 16-Month Low of $26K as Effects of the Terra Crash Spill Over

Bitcoin (BTC) nosedived to lows of $26,595, a scenario not seen since Dec 30, 2020, when the leading cryptocurrency dropped below the $27,000 zone.

Even though Bitcoin had regained momentum to hit $27,769 during intraday trading, the top crypto continues to limp based on factors like Fed’s interest rate hike and the Terra crash.

TerraUSD (UST) and Luna (LUNA) are two tokens mainly supported by the Terra network, a blockchain project developed by South Korean-based Terra Labs.

LUNA sent shockwaves to the crypto market because it collapsed to nearly zero in just a day.

Source: TradingView

LUNA was previously one of the largest cryptocurrencies based on more than $40 billion in market capitalization. It had shed off 97% of its value in the last 24 hours, according to CoinMarketCap.

Terra’s UST was also not spared because it fell to lows of $0.225 this week despite it being the third largest stablecoin globally after Tether (USDT) and USD Coin (USDC). Market insight provider IntoTheBlock noted:

“As the stablecoin UST fell to $0.225 overnight, the number of transactions happening reached a new high, representing a 13x increase against the previous 2 days. Investors are rushing to sell their UST positions.”

Source: IntoTheBlock

Despite UST recovering to $0.63 during intraday trading, it is still below the expected $1peg.

Therefore, Bitcoin is still suffering from the receiving end based on the shockwaves triggered by intensified liquidation of UST and LUNA.

Moreover, the leading cryptocurrency faces additional pressure because the Luna Foundation Guard intends to revive UST by selling its BTC reserves worth $3 billion.

Nevertheless, as Bitcoin continues to trade in the extreme fear territory, time will tell how it plays out in the short term because events of intense fear are often followed by bullish momentum.

Tether Regains $1 Peg

Tether (USDT) has regained its 1-to-1 peg with the dollar after briefly dropping to 94.55 cents, its lowest since December 2020.

According to Bloomberg, Paolo Ardoino stepped amidst worries to reassure investors. Tether’s chief technology officer asserted that the company behind the coin that plays a key role in the crypto ecosystem could redeem itself.

“Actually the peg was not broken,” Ardoino said on Twitter Spaces Thursday. “It would have been broken if Tether didn’t honor redemption at $1.” Ardoino spoke for an hour together with crypto pioneers Samson Mow, the chief executive office of Jan3, and Adam Back, CEO of Blockstream.

The largest stablecoin was up by 4.34% in the last 24 hours to hit $0.998 during intraday trading, according to CoinMarketCap.

Market insight provider Santiment noted:

“Tether lost its $1 peg to start Thursday’s trading, dropping to $0.95 for the first time since March, 2020. The world’s largest stablecoin is speculated to be impacted by the LUNA and UST crashes. USDT social volume has now hit a 17-month high.”

Source:Santiment

The spillover effect of the Terra crash was a primary factor in Tether’s high liquidation, given that even whale addresses increased selling pressure. Santiment acknowledged:

“In case there was any doubt on the seriousness of Tether losing its $1 peg, key whale addresses have dumped a total of $710M in USDT today. This is the largest one-day dump from 100k to 10M USDT addresses in crypto’s largest.”

Source:Santiment

LUNA, a native token of the Terra network, sent shockwaves to the crypto market after collapsing to nearly zero overnight.

Moreover, TerraUSD (UST), the algorithmic stablecoin on the Terra network, also experienced a free fall to the extent that leading crypto exchange Binance temporarily halted withdrawals.

The UST crash brought stablecoins to the limelight, triggering Tether’s liquidation.

Nevertheless, Tether is different from UST because its value is directly pegged to the US dollar.

Ransu Salovaara, the CEO of DeFi platform Likvidi, acknowledged:

“It’s important now to acknowledge that Terra is a so-called algorithmic stablecoin, not directly backed by USD. The most popular stable coins like Tether (USDT) and USDC are actually backed by USD in the bank and both of those survived the market sell-off well.”

Therefore, UST maintains the $1 threshold through code and not a collateral based on its algorithmic nature.

Will Terra’s UST and LUNA Crash Cause a Shift to ‘Cryptos that have Stood the Test of Time’?

LUNA has left crypto enthusiasts’ mouths agape because they could never imagine in their wildest dreams that one of the top ten cryptocurrencies could collapse to near-zero overnight.

LUNA and TerraUSD (UST) are the native tokens of the Terra blockchain network developed by South Korean fintech firm Terraform Labs.

LUNA sent shockwaves to the crypto market because it nearly lost 100% of its value by hitting an all-time low of $0.027 on May 12 from the all-time high (ATH) price of $119.18 recorded nearly a month ago on April 5, according to CoinGecko.

Source: TradingView

As one of the top ten cryptocurrencies, LUNA’s market capitalisation had surpassed $40 billion, but the present crash drove it to lows of $349,000.

The algorithmic UST stablecoin on the Terra network was not spared either because it nosedived to historic lows of $0.29 on May 11. The stablecoin’s ATH was recorded on January 11, 2021, when the price soared to $1.09, according to CoinGecko.

What caused the crash?

Things started going south when UST’s price experienced a free fall to the extent that leading crypto exchange Binance temporarily halted its withdrawals together with that of LUNA.

Anshul Dhir, the co-founder and COO of EasyFi Network, opined:

“Terra’s fall could be attributed to large scale selloffs of the LUNA tokens owing to the reported “de-peg ” of the algorithmic stable coin. This selloff must have also got exacerbated with the market already being in a largely bearish mode.”

The algorithmic nature of UST could have triggered the crash because its value is not directly pegged to the US dollar, according to Ransu Salovaara, the CEO of decentralised finance platform Likvidi. He added:

“It’s important now to acknowledge that Terra is a so-called algorithmic stablecoin, not directly backed by USD. The most popular stable coins like Tether (USDT) and USDC are actually backed by USD in the bank and both of those survived the market sell-off well.”

Therefore, the current crash shows the problems associated with algorithmic-based stablecoins because they are at the experimental stage.

Dhir pointed out:

“Experimental algorithmic stable coins are volatile and it is believed that it will take some time to find a good algorithmic stable coin. Over a period of time such programmable money should be possible which ultimately is the end goal of decentralized finance.”

Explaining the current fiasco, Do Kwon, the founder of Terraforms Labs, took to Twitter and tweeted:

“The price stabilization mechanism is absorbing UST supply (over 10% of total supply), but the cost of absorbing so much stablecoins at the same time has stretched out the on-chain swap spread to 40%, and Luna price has diminished dramatically absorbing the arbs.”

Was Do Kwon the face behind the failed algorithmic Basis Cash stablecoin?

Former Terra employees claimed that Do Kwon, the company’s CEO behind the Terra network, was one of the pseudonymous co-founders of the failed algorithmic Basis Cash (BAC) stablecoin.

Hyungsuk Kang, a former Terraform Labs engineer, noted that BAC was a side project. He added:

“Basis Cash wasn’t tested at the moment, and we weren’t even sure it would work. Kwon wanted to just test it out. He said that this was a pilot project for doing that.”

Launched in late 2020 on the Ethereum (ETH) network, Basis Cash was deemed a game-changer that could revive the decentralised finance (DeFi) Sector.

However, BAC never saw the light of day because it dropped below the $1 peg and traded below the 1 cent mark on May 12 by hovering around $0.0059, according to CoinGecko.

Just like UST, Basis Cash had to maintain the $1 threshold through code and not collateral. Therefore, history seems to be repeating itself concerning LUNA and UST.

‘Cryptocurrencies that have stood the test of time’

On January 3, 2009, Bitcoin’s genesis block was mined, setting the ball rolling on what the crypto space would offer.

Thirteen years down the line, Bitcoin’s dominance in the crypto sector continues to be felt even though its journey has not been smooth sailing.

For instance, as the coronavirus (COVID-19) pandemic continued to wreak havoc in early 2020, Bitcoin shed off more than 50% of its value in less than 48 hours on March 12, commonly called the ‘Black Thursday’ based on the global stock market crash.

As panic selling engulfed the market, Bitcoin’s price nosedived to $3,800 from around $8,000.

However, these scenes did not stop BTC from attaining the then all-time high (ATH) of $64,800 a year later in April 2021.

A month later, the leading cryptocurrency found itself on the receiving end after plummeting by more than 50% to hit lows of $30K based on Chinese authorities’ intensified crackdown on crypto mining.

Nevertheless, Bitcoin scaled the heights to set a new ATH of $69,000 in November 2021.

Despite the present bearish picture, Bitcoin has shown that it’s a hard nut to crack based on the ups and downs endured in its 13-year journey.

Veteran trader Peter Brandt believes Bitcoin is the face of crypto. He pointed out:

“This decline is just plain Lunatic LUNA. I have spoken open about my distrust of altcoins and that crypto is Bitcoin and Bitcoin is crypto. The problem is that distrust in that which is distrustful can spill over into that which is trustworthy (Bitcoin).”

Source: TradingView

Ethereum has also been in existence for close to seven years, and it is crafting a name for itself in the DeFi sector.

Therefore, the LUNA and UST crash might shift the narrative to more established cryptocurrencies that have stood the test of time.

Terra Resumes after Halting Blockchain Production to Prevent Governance Attacks

Terraform Labs, the company which supports the Terra ecosystem, briefly halted the Terra blockchain for two hours on Thursday after a dramatic slump in LUNA and UST, before restarting at around 1:45 p.m. local time.

The company said the suspension of the network was to implement a patch preventing users from staking on its network.

Terraform explained it briefly that the suspension of blockchain operations as LUNA’s price dropped too low, that need to “prevent governance attacks” adding that:

“Terra validators have decided to halt the Terra chain to prevent governance attacks following severe $LUNA inflation and a significantly reduced cost of attack.”

The Terra blockchain network stopped generating new blocks after its block height was 7603700, meaning holders could not move their Terra assets until the blockchain was unfrozen.

At the time of writing, the Terra stablecoin TerraUSD (UST) was off the $1 level it was supposed to hold, trading at $0.1288, losing its peg to the U.S. dollar.

The founder behind it, Do Kwon, noted in a series of tweets “Before anything else, the only path forward will be to absorb the stablecoin supply that wants to exit before $UST can start to re-peg. There is no way around it.”

By late Thursday, LUNA had fallen to less than $0.50 from nearly $120 in early April. LUNA pared all of the gains it had accumulated over the past 12 months.

Luna Foundation Guard Details About Depleted Reserve

The Terra blockchain as we know it has come to its end and post mortem analysis from the Luna Foundation Guard (LFG) shows the not-for-profit organization has almost used up its reserve as confirmed in a tweet shared early on Monday.

The LFG is the body that was tasked with developing the digital assets reserve base for the TerraUSD (UST) stablecoin.

A little more than a week ago, the LFG said it has a balance of 80,394 Bitcoin (BTC), 39,914 Binance Coin (BNB), 26,281,671 USDT, and 1,973,554 Avalanche (AVAX) amongst others. In the wake of the de-pegging of the UST stablecoin from its projected $1.

LFG said it liquidated some of its Bitcoin holdings on top trading platforms to help restore the peg.

“Consistent with its non-profit mission & focus on the health of the Terra ecosystem, beginning on May 8, when the price of $UST began to drop substantially below one dollar, the Foundation began converting this reserve to $UST,” the LFG said in a tweet adding that “the Foundation did so by directly executing on-chain swaps and transferring $BTC to a counterparty to enable them to enter trades with the Foundation in large size & on short notice.”

Through its efforts, the LFG said it directly sold 26,281,671 USDT and 23,555,590 USDC for an aggregate 50,200,071 UST. The organization also noted that it transferred 52,189 BTC units to trade with a counterparty, net of an excess of 5,313 BTC that they have returned, for an aggregate of 1,515,689,462 UST.

After these transactions, the LFG said it now has only 313 BTC units with no stablecoins left and a host of its other reserve assets.

Seeing the massive plunge in UST price, the LFG said its primary focus now is to compensate holders of UST before the algorithmic stablecoin suffered its attack.

Changpeng Zhao Clarifies Binance's Investment in Collapsed Terra

Terra’s ship sailed gallantly but has now collapsed following a series of algorithm attacks that made the blockchain network’s native token LUNA plunge to what many see as an irredeemable level.

With so many experts wondering what is going on, Binance’s Chief Executive Officer, Changpeng Zhao has come out to clarify the investments the trading platform has in the Terra ecosystem in what appears as a response to false claims going around on Twitter.

According to CZ, as he is fondly called, Binance invested $3 million in Terra back in 2018 when the project was labeled a Layer 0 blockchain, and the trading firm did not invest in the protocol in its second financing round. CZ said Binance did not also make any acquisition of UST, the network’s algorithmic stablecoin that is no longer maintaining a peg with the US Dollar.

“I need to address falsehoods circulating in crypto twitter,” Zhao said in the Twitter thread, “Binance did not participate in the 2nd round of Luna’s fund raising nor did we acquire any UST. Binance Labs invested $3m USD in Terra (the layer 0 blockchain) in 2018. UST came much later after our initial investment.”

The CEO noted that the exchange has made hundreds of investments over the years and while some turned out very successful, there are a number of others who end up by the wayside.

Changpeng Zhao also lends his voice to the Terra ecosystem’s validator’s proposal to fork the blockchain and create Terra2 by taking a snapshot of LUNA token holders’ balances prior to the network’s attack and eventual price slump. To CZ, “Minting, forking, don’t create value,” but burning and token buyback do.

At the moment, there are approximately 6.5 trillion LUNA tokens in circulation, and burning or buyback, according to CZ can be very expensive. While CZ has promised further support beyond the relisting of LUNA/USDT spot trading shortly after halting the services, the CEO however, demanded transparency and accountability.

SBF Suggests LUNA's Collapse Different to Theranos, but Questioning its Marketing Strategy

FTX Derivatives Exchange’s billionaire CEO Sam Bankman-Fried, known as SBF, has faulted the marketing strategies that were employed by the embattled Terra blockchain to gain acceptance from the public.

These comments come on the heels of the protocol’s two tokens, LUNA and UST, losing their value and peg to the US Dollar respectively.

While many people have been comparing the crash of Terra to the collapse of Theranos, a once innovative healthcare technology that was founded and managed by Elizabeth Holmes. To Bankman-Fried, the downfall of both startups cannot be compared as Elizabeth lied to investors about a technology that was not working in order to keep getting funding.

He believed the operations and management of Terra, led by Do Kwon, were transparent. The face of the Terra ecosystem has not failed to talk about the fact that UST is not backed by the US Dollar but by a set of volatile cryptocurrencies like Bitcoin and Terra. Should these coins plunge, the stablecoin stands the risk of also losing its peg.

While Bankman-Fried noted that he is not making excuses for Kwon and the Terra purveyors, he believes the fall of the protocol should be markedly classified differently from that of Theranos.

“Luna was a case of mass enthusiasm, excitement, and–frankly–marketing and memes–driving people to believe in something which was going to falter according to the publicly available information. That marketing was probably bad. But it wasn’t the *same* type of bad as Theranos,” He said in a Twitter thread over the weekend.

The fall of the Terra protocol has been classified as a watershed moment for the cryptocurrency ecosystem. While it seems as though the network cannot be salvaged, a number of support and proposals to revive the ailing blockchain is being proposed as we speak.

In a bid to make his followers understand that Terra is not necessarily conceived as a Ponzi scheme, Bankman-Fried said other legitimate companies, including Netflix, have also lost at least 50% of their value since the start of the year.

South Korea Launches “Emergency” Inspection of Crypto Exchanges Following Terra Crash

Financial authorities in South Korea have beefed up crypto exchange inspections to boost investor protection following the recent collapse of LUNA and TerraUSD (UST) tokens

Per the announcement:

“The Financial Services Commission and the Financial Supervisory Service (FSS) have recently asked local cryptocurrency exchange operators to share information on transactions linked to TerraUSD and Luna, including the volumes of their trading, their closing prices, and the number of relevant investors.”

The financial watchdogs are also scrutinizing what caused the recent market crash and creating countermeasures for future events.

Confirming the ongoing inspection, an official of a local crypto exchange stated:

“Last week, the financial authorities asked for data on the number of transactions and investors and sized up the exchanges’ relevant measures. I think they did it to draw up measures to minimize the damage to investors in the future.”

Nearly 200,000 investors in Korea are speculated to have invested in LUNA and UST.

Despite the Terra tokens being invented by a Korean national, the authorities are taking the case seriously because they were traded globally. Do Kwon, the CEO of Terraform Labs, is the face behind the Terra blockchain.

The Terra ecosystem has been making headlines over the past week because LUNA collapsed to near-zero overnight despite being one of the top ten cryptocurrencies.

Kwon has proposed hard forking the Terra blockchain so that the troubled network can be salvaged, and if his suggestion is implemented, the new chain is set to go live on May 27.

Following the Terra crash, Kwon has been the centre of scrutiny, with some quarters suggesting that he was one of the pseudonymous co-founders of the failed algorithmic Basis Cash (BAC) stablecoin.

Therefore, history seems to be repeating itself because Basis Cash had to maintain the $1 threshold through code and not collateral, just like UST.