Terra dust has not settled yet, Luna fell more than 90% in one day

Still a tough day for Terra.

15 hours ago, Do Kwon tweeted that a UST recovery plan would be announced soon.

12 hours ago, there was news that the Luna Foundation LFG is seeking to raise more than $1 billion from institutions to support UST. However, according to Larry Cermak, a researcher at The Block, the financing details currently known are: LFG is seeking about $1 billion to $1.5 billion in financing, Jump Trading, Celsius and Jane Street have agreed to the financing, with a commitment amount of about $700 million, and Alameda Research has not yet agreed. The condition of the institution is to get LUNA spot at a 50% price discount, lock the position for one year, and unlock it linearly on a monthly basis after one year. Larry emphasized that the financing has not yet been confirmed and everything is subject to change. (At 17:00 Beijing time, Larry Cermak revealed that the plan had failed)

8 hours ago, Terra founder Do Kwon announced: The dust will soon settle, everyone hang in there.

The dust has not settled yet and all efforts are ongoing.

4 hours ago, Terra Bites tweeted, "We are here, still unsure of all the details but finding it increasingly convincing that this is a multi-layered economic hitman attack. We are here, some of us have suffered liquidation and feel the pain of those in similar predicaments."

Three hours ago, a community proposal 1164 was proposed to "increase the anchor value of UST and increase the minting capacity to 1.2 billion US dollars."

2 hours ago, a Twitter account named "Terra Builders & Community: Planning" (@TerraBuildersU) was established to re-establish the Terra community to start the rebirth plan. "In all the history of cryptocurrency, there has never been an event like this. We have not ruled out the possibility that Terra survives as a blockchain, but in any case, we now feel the need to bring people together at this moment."

At 17:00, Luna continued to fall, and the decline in just one day was nearly 90%, and the current price was 3.9 US dollars. Looking back at Luna's glorious history, Luna climbed to a high of 119.5 US dollars on April 5. After 36 days, Luna fell by 97%. UST was seriously decoupled, once falling to 0.2U, and is currently 0.48U.

LUNA Trend

UST Trend

Just now, Terra founder Do Kwon wrote to the Terra community that Terra's focus has always been around the long-term time frame, and another setback in May this year, similar to last year, will not stop LUNAtics. Short-term missteps do not define what you can accomplish. What matters is how you respond. Terra's return will be a sight to behold. We are here to stay. We will continue to make noise. The only way forward is to absorb the stablecoin supply that wants to exit before UST starts to repricing. There is no other way. We have proposed some remedies to help the peg mechanism absorb the supply: We support community proposal 1164, which should allow the system to absorb UST faster.

The dust has not settled yet.

Layer2 technology company Aztec Network CGO jonwu.eth analyzed that UST may survive, but LUNA will also return to zero. He pointed out that it is not important what the total implicit value of LUNA is. What is important is the marginal value of each LUNA exchanged for UST, and vice versa, that is, the price of LUNA. That is, the fact that UST has a higher market value than LUNA is not really shocking, but that UST is redeemed for LUNA, causing the price of LUNA to collapse:

• When LUNA price rises: users destroy LUNA and mint a large amount of UST

• After the LUNA price drops: UST redeems a large amount of LUNA

Suppose the price of LUNA is $1 billion, someone destroys LUNA and mints $1 billion UST, and LUNA falls to $1. This person can use $1 billion UST to redeem 1 billion LUNA tokens, which will result in a huge amount of cheap LUNA being sold in the market. This is exactly what happened today.

Crypto user @CryptoWhale posted that LUNA has fallen 98% in just 6 days. The founder calling his community "crazy" now makes perfect sense. The same fate will happen to Tether, Bitcoin, Ethereum, and countless other overpriced cryptocurrencies. We are still in the early stages of this bear cycle.

@CryptoMichNL, founder of Eight Global, said, "Honestly, UST and LUNA are just a self-destruct system at this point, and it won't end until it's small enough to be repaired. This means that in the future, people won't use this system anymore. This means it's technically completely over."

ElrondNetwork founder @beniaminmincu wrote that algorithmic stablecoins are very difficult. Much more difficult than people realize. The directional progress made by Do Kwon is already remarkable. The problem is that all security relies on a highly complex, reflexive, feedback loop. If it works, it's genius; if not, it's too hard. For the benefit of the entire crypto ecosystem, a way must be found to temporarily stop the spiral of LUNA/UST, re-examine the damaged architecture, correct the misalignment, and set the right incentives to restart a stable feedback loop . This is the best and only option.

Today, some people became rich overnight because of LUNA, and more LUNA community members fell into trouble due to the plunge, but no matter what, the sun will rise as usual tomorrow, and we hope that all our efforts will bear fruit.