Anchor Earn vs Borrow. growing chasm

General
98

Hey all, just joined because I believe there is another point to all of this that a lot of people dont seem to be seeing.

The Abracadabra UST leverage farm is a very convenient way for Terralabs to liquidate hundreds of millions of UST without hurting the peg a lot and they have a direct incentive to keep that one going for as long as possible.
How are they doing it?
Happy that you asked.

  1. Back in September Terralabs announced “Project Dawn” to help cover operating costs by releasing 3 million Luna a month from the genesis wallet, which I believe they have maxed out so far. Why they need 300m a month to cover operating costs, beats me.
  2. To cash out that humongous amount of money every few minutes bots are selling/burning Luna into UST (for example terra1zz2nf34fjkjygkg0kplkrr29ycxarmct6kafvj)
  3. Once enough UST is collected, TFL bridges the money over to ETH mainnet to the wallet 0xa046a8660e66d178ee07ec97c585eeb6aa18c26c
  4. Every time Daniele opens up the Abracadabra leverage farm by another 100m, what happens is that those users are selling those newly minted MIM for more UST which imbalances the MIM-UST curve pool.
  5. When the UST-MIM curve pool is sufficiently imbalanced another bot will sell as much as UST as possible into the curve pool until a perfect 50/50 ratio is reached again. In case above they are now sitting on 100m MIM in the wallet
  6. Then slowly the MIM is being sold into the MIM-3pool at a favourable peg and the USDT/DAI/USDC Stablecoins are being send to different exchanges to cash out (probably)

Over the last weeks Daniele opened up the leverage by another 500M bringing it to the currently 1.3bn it is sitting at and TFL was very fast to bridge over as much UST as possible and they have been trying to slowly sell all the MIM ever since as evidenced by the tx log from the wallet above.

Therefore TFL indirectly uses Anchor to cash out hundreds of millions of UST using MIM as a intermediary and given that Project Dawn keeps continuing releasing tokens I would guess they will continue to go on like this.
They have to keep this going for as long as possible and without knowing whats going on in the background I am sure all the parties involved here are aware of this.

Please let me know if I interpret something wrong, but the on-chain data is pretty clear in its purpose.

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