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r/terraluna
•Posted by u/CrySevere8252
15 hours ago
Why did terra Luna crash by 50% in a span of 24hours on 10 May 2022
Discussion
What triggered the Luna terra to dip by more than 50% in a span of 24 hours? We asked some friends who uh..know things and they believe two things:
This is a coordinated attack
The attacker is likely Citadel (you may remember them as the whales who saved the hedge funds against the Reddit Gamestop short squeeze) Citadel is one of the world’s biggest market makers. In 2020, they made $6.7B and $4.1B in EBITDA and hadn’t raised any outside capital previously. They make about as much money as Nike, Starbucks, and Paypal. Yeeeeesh. This is a dramatic entrance to the crypto game.
Here’s the Play-By-Play of what went down: • The "attacker" cleared out liquidity pools on Curve Finance, which was ~$300M UST • Then they started dumping the UST which caused people to panic and sell their UST - this all caused a minor depeg • UST backers like Jump and LFG started selling other crypto assets like ETH and BTC to buy UST and bring the peg back • That may have been exactly what the attacker wanted because it seems like they were actually shorting BTC (aka betting the price was gonna go down, they anticipated this because they knew LFG would need to sell their BTC to regain peg). Basically - they knew the counterpunch and were going to profit from that too • Mass panic hits and people start selling on exchanges which caused huge congestions • Exchanges halted UST and Luna trade until things could stabilize • This caused even more panic so people started withdrawing even more UST from Anchor, which caused a bank run for the protocol. Over 50% of all funds were withdrawn in the span of 48 hours
Stablecoins are meant to always stay at $1. Minor fluctuations (like, pennies) are normal, but going down to $0.90, $0.80, $0.70 and finally $0.64 is a nuclear bomb for the project.
This hurts everybody - Forget about the bagholders who own Luna/UST (aka the Milk Road portfolio). To defend the peg, the team behind UST and the investors who back it had to take $1B+ in other collateral (Bitcoin, ETH) and get ready to sell it to try and save UST. This hurts Bitcoin and ETH too with huge sell pressure
This breaks trust - Even if the peg recovers today to $1, many people will lose trust in UST after seeing it attacked and nearly fall. This also gives regulators room to try and put their grubby paws on stablecoins (which they view as a big threat to the dollar, because stablecoins are essentially a digital replacement of the dollar). Janet Yellen already came out and mentioned the need to regulate stablecoins more closely and that we need a regulatory framework for them.
They also coordinated the social media(twitter, discord, etc) fudding in conjunction with the attack.
Wish LFG wasnt so transparent with its holdings/timing of purchases. Easy target. Ken Griffin, CEO of Citadel, also outbid a DAO for the US Constitution
We as a community to show these fking Citadel bich not to mess with us just like GMC, can someone find if they have any short position left? I myself lost 130k, my whole life saving, do not want the money back, just want these fker to stop manupulating the market everywhere and fk*ing everyone