Cyrus Younessi, former Head of Danger Administration at MakerDAO, predicted Terra (LUNA) drama again in 2018
Seasoned Ethereum (ETH) developer, investor and advisor Mariano Conti, former Head of Good Contracts at MakerDAO, recalled a dialogue on Terra (LUNA) design flaws from April 2018 — and it seems completely visionary.
Terra’s (LUNA) ‘dying spiral’ was predicted in 2018
Mr. Conti has taken to Twitter to share a press release by Cyrus Younessi, his colleague at MakerDAO. On April 20, 2018, Mr. Younessi slammed the structure of Terra (LUNA) and its TerraUSD (UST) stablecoin.
I name bullshit on not realizing Luna would dying spiral.
This is @cyounessi1 in freaking 2018 explaining concisely what may, and inevitably did, occur… pic.twitter.com/dnt5lOrjlc
— mariano.eth ✨ᕙ༼ຈل͜ຈ༽ᕗ✨ | 🦇🔊 (@nanexcool) July 22, 2022
In a press release cited by a blockchain veteran Linda Xie, former PM of a cryptocurrency alternate main Coinbase, Mr. Younessi bashed the thought to solely again UST with the LUNA token.
In 2018, he in contrast this design to MakerDAO’s DAI, however if the latter had been solely backed by the MKR asset. This “one-asset” backing is just too fragile: traders’ panic would simply launch a “dying spiral” mechanism when two cryptocurrencies — a stablecoin and its “fundamental token” — can be racing in the direction of zero.
However LUNA would fall if traders would panic, then, Terra would proceed to fall, after which they’d simply every hold contributing to one another’s demise
He additionally recalled the tragedy of the first-ever algorithmically-backed stablecoin NuBits (USNBT) that collapsed in Q2, 2016; Mr. Younessi was shocked that some groups are nonetheless serious about related designs.
Terra (LUNA) collapse was painful to complete business
Mr. Conti additionally connected a press release on Three Arrows Capital’s Su Zhu, one of many largest traders decimated by Terra (LUNA) collapse. Mr. Zhu allegedly “failed to appreciate” how fragile the LUNA/UST ecosystem is.
As beforehand lined by U.Right this moment, because of the large-scale withdrawals from over-hyped Anchor Protocol (ANC) and subsequent panic promoting, TerraUSD (UST) stablecoin misplaced its peg to the U.S. greenback.
The “dying spiral” pushed the costs of LUNA and UST to near-zero values; dozens of cryptocurrency funds with open positions in LUNA had been liquidated.