Unanchored Moonlight: Terra’s Origin, Predicament, Deduction, and Way Out

Original title: "Moonlight Unable to Anchor"

Original Author: @0xTodd, Partner of Nothing Research  

In fact, Luna's problem is only about one word: "liquidity".

As a volatile asset with insufficient liquidity, Luna can cast UST at a 1:1 equivalent value, and with the help of Curve and other EX, it has obtained the legal currency that Stablecoin only deserves fluidity. From that day on, it was doomed to die. And 20% APR is more of a total button for acceleration.

--Origin--

2.1  Let’s talk about the reason first, the fuse-UST big players left.

On May 8th, the excited Terra is preparing for the 4pool (a new pool on Curve) that is known as "the end of Curve War". The liquidity of the old pool was temporarily withdrawn. However, the 8400w UST may be a misjudgment, or a snipe, and directly smashed the market price of UST on Curve, and immediately smashed the unprepared UST off the anchor.

2.2  Fermentation - Terra's Mistake PR.

I once said that confidence depends on confidence. If confidence is lost, it is the beginning of eternal doom.

After unanchoring, you should actually continue to fight chicken blood, drink chicken soup, and pass it lightly.

But Terra has been reverse PR: We are saving the market! We're going to hold this anchor.

This sucks and conveys negative confidence: You say you are healthy, so why see a doctor?

2.3  External conditions - bad market

Under the influence of US institutions, BTC is highly linked with US stocks. Affected by interest rate hikes and balance sheet shrinkage, U.S. stocks have been performing poorly, which has led to a continuous negative decline in BTC. Unfortunately, LFG made the wrong decision at the wrong time. Since the average cost of LFG's 10w BTC is around 4w, it can't cut the meat at this time, and the rescue tray needs money. LFG had no choice but to mortgage BTC to the market maker in exchange for legal currency to support UST.

2.4  The situation has deteriorated

However, BTC continues to fall, which makes LFG even more difficult. If UST continues to unanchor, the BTC that has just been mortgaged is also at risk of liquidation. So we can see that LFG will soon transfer all the remaining BTC out, maybe selling it, maybe keeping the fruit, or more likely to replenish the margin, which makes the situation completely worse.

LFG Address Tracking: https://bitinfocharts.com/bitcoin/wallet/Luna-LFG

2.5

Because, the narrative of "UST-BTC mutual rise and fall" just established is officially declared shattered . This brought about a new wave of FUD that led to today's situation.

--Dilemma--

3.1 < b> What is DK's current predicament?

Under the circumstances of lack of funds, it is no longer possible to fully protect the market. He needs to make a difficult decision-whether to protect Luna, Still keep UST. Because there is not much ammunition left, you have to do your best to keep one.

3.2  Paul Luna

Then it is necessary to manually increase the price of the oracle machine (using the expected price), abandon the 1:1 rigid exchange mechanism, and instead maintain Luna's premium to UST, in a disguised way to make UST burners retreat. Just burn UST. For example, the market price of Luna is 1.1, but the burning price is 1.3. There is very little room for arbitrage, which is why UST has not returned to anchor so far.

But this will severely damage the fundamentals of UST (no longer stable), and it is impossible to make a premium for a lifetime.

Burn UST for Luna

< br>

3.3  Keep UST

Then you have to see UST replaced Luna smashes it down so it can return to the anchor. But Luna has less than $1 left. The market value of Luna is only 1/5 of that of UST. Even if it is smashed to pieces, it is not enough for UST holders to withdraw.

There is an English word that describes this well: insolvent (free translation means insolvency), which is also the end of every ponzi.

「technically insolvent」

< br>

3.4  DK's response

Maybe after careful consideration, On May 11th, DK finally wrote a short and concise thread, with only one sentence to the effect, I still want to keep UST.

If I were DK, then I would turn off the cross-chain bridge, please Jump and Binance force the UST of Binance back to 1, which is very beneficial Market confidence, perhaps a glimmer of life.

Tweet of DK

3.5  Break the psychological defense

However, he posted this After reading the article, everyone also understood his intention: it seems that he wants to give up Luna.

Luna fell further and completely broke everyone's defenses. Everyone saw Luna starting with 0. Binance even downgraded the precision of the Luna contract. You know, 1 month ago, it was still three digits, but now, it depends on three decimal places.

Ann of Binance

--Deduction--

4.1  Deduction-UST true Can you keep it?

Mobility is everything. This is also the subject of our thread.

Looking at the audience, although UST still has 0.8U, the Curve liquidity is close to drying up to less than 2000w, and there are 300w left on Terraswap and Astro. Binance, FTX's handicap UST, Luna may still look like a small million.

However, there are 13 billion UST wanting to run.

4.2

I have been exposed to many Luna Farmers, most of them are extremely smart, and of course some are deceived, especially ordinary people/small and medium companies in Korea, let’s not show it for the time being. In any case, under the current circumstances, it is everyone's consensus to run.

4.3

However, the escape quota is only Less than 1%. UST seems to still have 0.8U, and many people fantasize about returning to the anchor. But the fact is cruel, only tens of millions of UST can enjoy the escape price of 0.8, while the remaining 10 billion+ billion is 0.

A thousand words into one sentence: Not enough liquidity!

Without liquidity, any token is waste paper. This is the difference between a Ponzi and a real asset.

--The way out--

< br>

5.1  So what should we do?

What if you try your best to keep one? The back is still running out of ammunition and food.

I admire DK's operational ability and charisma. But no matter how good a person is, he cannot overcome things beyond his ability and must rely on external forces.

I carefully calculated, there may be three final ways out.

5.2  The way out

Looking forward to the miraculous rebound of U.S. stocks, BTC followed U.S. stocks, quickly returned to 4w and then 5w, and the entire market re-entered Fomo.

However, under the current expectation of raising interest rates and shrinking the balance sheet, such conditions are hardly met, and the possibility is very small.

5.3  The second way out

Convince Jump trading, counting on market makers to save their lives. Other Luna investment institutions, such as 3AC and Binance, have made it clear that they want to stop losses, but Jump, which is deeply bound, may save them.

But the problem is: to save life, at least billions of dollars are needed. But if billions of dollars are spent, the price of the currency is saved, but everyone runs away, then the project seems to have no need to exist.

5.3+

And, from the According to the block, it seems that Luna's financing plan has failed.

5.4  The way out

Shock therapy.

As the name suggests, let it go.

For example, when Luna falls back to 0.01 and UST falls to 0.01, then with LFG's current strength, it is hopeful to get them all back. But at what cost? I think everyone understands.

The last shock therapy project, such as Basis Cash, used to be the third generation king. You can see how much money is left in the algorithm-guaranteed "USD Stablecoin" BAC.

< b>5.4+

PS: Interestingly, Terra staff broke the news that DK is also an important participant in BAC.

--Feelings--

6.1   Talk about something else.

I like Twitter very much, but the only dissatisfaction with the CT atmosphere is that many people do not tell you the risks behind this thing, but Directly use Few and NGMI to describe people who don't embrace Ponzi.

What's more, they like to embrace ponzi fanatically, boast that ponzi has reached the sky, and try to smash it to the receiver after other people come in, and are complacent about their escape top.

6.2

These two days, I I went to Terra's Discord, (its Tele seems to have been reported as unable to join), and listened to a lot of Twitter space. Many foreigners have devoted all their life-saving to Anchor, and now they are very helpless and painful, and they can even hear their faint cries when they speak.

Many people have been cheated, by DK, by Terra, by these people who claim to embrace Ponzi, and their half-life savings have been turned into paper without any liquidity The face is rich.

6.3

I am nothing Big KOL, I’m just a crypto researcher, and I manage a small crypto fund (@NothingResearch) with my partner, and the money in it is basically our own. I don't take ads, I don't take rebates, and as I've said before, my idol is @ZachXBT and he's known for debunking scams.

6.4

My conscience drives I have written these words in the last six months. Many of my friends hold luna, maybe I am too much against luna, I even feel that they are quite critical of me.

If you look through my twitter, you will know that for a long time, I was reluctant to mention Luna's name directly, for fear of offending Luna Holder scolding. Of course, I don't blame them, after all, I want to go to cx after buying crypto.

6.5

But I still want to say , When I meet Ponzi, I will still point it out firmly.

This is a matter of principle, every time I save a person, I feel more at ease.

The above content is purely random thoughts, comrades who are not interested, please ignore it.

--Finally--

7.1  Back to Luna

I don’t recommend going short with large funds at this point, centipede, dead but not stiff. Although the 1-dollar Luna will eventually go to 0 dollars, it may return to 2 or 4 dollars for a short time. I also don't recommend jumping sideways and bands repeatedly, because most people will only return the principal to the exchange slowly.

7.2

Maybe UST still has some

Maybe $ANC and other ecological projects on the Terra chain will not be able to survive. will be better. Refer to the current status of the Tianwang project on EOS;

Maybe DK can turn the tide once, but I am afraid it will be the last time, and the odds of winning are really too low.

< b>

7.3

Finally, many friends are obsessed Algorithmic Stablecoin, including me.

I think Suan is an elf in the DeFi forest, so tempting, maybe close at hand, but maybe not there at all, but it has attracted countless people to follow.

But beware, don't bet all your chips on a social experiment.

I still look forward to the birth of a non-custodial, completely algorithmic Stablecoin-bringing a fairy-like dazzling light to this increasingly out-of-control world.

Looking for elves  

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