Terra (LUNA) Falls 95% Weekly, What Does Do Kwon’s Million Dollar Bet Mean?

As the Terra ecosystem’s UST stablecoin was released over the weekend, LUNA also slipped like crazy, losing about 95% of its value.

Efforts to rescue UST continue as LFG, acting as a resolution protocol, drains all bitcoins from their financial wallets. There are now rumors circulating that the organization wants to raise $1 billion to help with the freefall project.

But what about the multimillion-dollar bet the metropolitan government recently made?

Luna Meltdown

LUNA, which relies on TerraUSD, plunged from $87 to $4.5 in press prices in less than a week. Now may not be the best time to remember the bet of Do Kwon, the outspoken founder of Terraforms Labs.

Almost two months ago, Kwon agreed to a $1 million bet on community member “Sensei Algod” on whether LUNA’s price will be higher in a year or more, i.e. over $88. The founder later said yes to another bet from anonymous cryptocurrency trader “GCR”, but this time the stakes were 10x higher. Soon, Kwon placed $10 million worth of stablecoins in escrow until the outcome of the bet.

Following a recent incident, Sensei Algod said Even if the peg is restored, trust is still lost while LUNA asks if it can recover from the crash. On the other hand, GCR offered $50 million and $20 million bets immediately after the first bet, but Kwon did not respond. Now the user update The original bet is to short LUNA for $10 million.

Cryptocurrency researcher Hasu previously warning Stablecoins lacking collateral “can’t work” said As a stablecoin issuer, the moral choice is to defend the UST by holding the treasury, even if that means LUNA goes to zero.

Despite the current bearish outlook, many believe LUNA will bounce back. One of them is the host of CNBC’s Crypto Trader Ran Neuner. Tweet,

“Every attack makes LUNA more resilient. BITCOIN happened several times in the early days. It’s part of the process!”

Labor Day

Algorithmic stablecoins have gained considerable popularity, but have also gained attention among critics. Many people in the latter group find the problem with assets like UST obvious.

Basically, there are two reasons. Unless backed by a reserve, special algorithms cannot guarantee that the market will always work. Last year, Mark Cuban, owner of the billionaire Dallas Mavericks and ABC “Shark Tank” investor, pegged the U.S. dollar after a massive sell-off by large investors, followed by the algorithmic stablecoin IRON. He said he lost money when this was released. However, Mr. Kwon does not yield to these narratives.

Recent market conditions have put tremendous pressure on the TerraUSD peg. And what many feared eventually happened. Not one, but two major depegging events.

Critics have noted that Terra’s emergency measures could add to the market’s current selling pressure and push the price further. However, vol share “LFG made UST stronger, but temporarily more centralized,” said Jose Macedo, founding partner at Delphi Ventures.

Special Offer (Sponsorship)

Binance Free $100 (Exclusive): Register Using This Link and Get $100 Free & 10% Off Fee on Your First Month of Binance Futures (hatchet).

PrimeXBT Special Offer: Use this link to register and enter your POTATO50 code to receive a deposit of up to $7,000.

Leave a Comment