Since the dynamic anchor rate went into effect may 1, There has been about 2.75 Billion UST withdrawn from Anchor deposit & possibly burned - causing LUNA price to drop 4x more than other notable coins like cardano, XRP, solano - as of today May 7. This has erased 4 - 5 billion dollars from LUNA coin marketcap. With the anchor rate to drop to 15% by end of July & also with concern about reserve running out by early June, any thoughts & concerns especially in light of current bearish crypto & stock market conditions?
Looking back, even with the Anchor reserve sustainability concerns, perhaps keeping anchor rate at 19.5% may have been better during this crypto bear market conditions? The way I see it…1)Either you reset the anchor rate back to 19.5% & spend a billion to top up the anchor reserve or 2) maintain the dynamic rate & gradually lower the anchor rate & face the inevitable UST withdrawal from Anchor & subsequent LUNA burn/depreciation – resulting in BILLIONS in loss of TERRA LUNA marketcap. I believe (even with the ‘valid’ sustainability concerns), option #1 is the lesser of the two evils under current dire crypto & stock market conditions.
P.S. Bitcoin has been tanking from 36K to low 34K within last 18 hours (since May 7 afternoon) & is in danger of falling below 32K & lower. It’s been painful to watch this descent & the negative impact on the altcoins, including LUNA. Thus, I believe it may be imperative to restore the 19.5% anchor rate at least until crypto market stabilizes somewhat til later this year hopefully. 20% (actually 19.5%) rate for Anchor Protocol was a real attraction for lot of folks but with declining anchor rate to 15% by July (if & when the yield reserve is topped up - i.e. another concern by early June), the anchor platform may have lost some of that aura IMO.
You dont know what your talking about lmao. I monitored the whole 7 hour event and it only shows an even more healthier UST, very strong LUNA demand, and that a UST runoff on anchor does not lead to death spiral, now with experimental proof.
So all the fud can go to sleep now we’re operating business as usual.
edit: prices @ post Luna @ 65.5 UST @ 0.996 USDT at time of writing on binance, also
Reason for drop: Curve UST supply was 300,000,000 overbalance, natural market arbitration has restored balances across defi, UST barely dropped half a cent on the terra blockchain.
Thanks a lot for providing insight. What OP is saying is completely illogical.
Which UST supply on Curve are you referring to? Which pool / network? I looked at the pools known to me, but they don’t have nowhere near the UST supply you mention. For example, TVL on mainnet 4pool is only $5 million. There is $50 million on Fantom. Which pool / network had the $300 million overbalance?
Edit: oh, I guess it must be UST - 3pool, which has $800m TVL on mainnet.
Edit 2: still, it’s not completely clear to me why $2bn was suddenly withdrawn on Anchor.
Well, if we look at the Jump trading wallet, there has been hundreds of millions of dollars of exogenous USDT that’s been shipped in to salvage this precarious situation.
There’s also this wallet below that’s been swapping 1,000 ETH to USDT to UST every few minutes including a 20,000 ETH transfer to Binance.
None of this is tied to LFG’s reserves, natural arbitrage or LUNA mint/burn redemptions. Today has been the final straw for me.
The degenbox saga, the leverage build up, the liquidations, the arrogance, the failure to deliver a balanced stable system with solid foundations. Enough is enough. I am out.
Thanks for your insight as always. Your the real goat for the community. Will miss you in the forums.
Didn’t know about this funneling, no disclosure, I think Do said he was going to discuss Tuesday about UST so I guess we’ll figure out how this saga ends. To be honest I’m getting tired of the lack of transparency in defi in general coupled with the sheer volume and intricacy of scams to avoid.
Andre Cronje did a piece about regulated crypto versus crypto regulations, using a nation state blockchain as entrance for fiat that has rules about what can or can’t interface. I think this is the way going forward and the defi protocols that figure out how to comply with those blockchain rules will be the ones that win biggest. Something for us to consider when parking our money.
My attorney was saying SEC is bringing the ban hammer hard on daos and most decen projects by targeting leaders so I’m not sure how that’s going to end but there will be blood on the streets, let alone us 10yr treasury contagion and yen and euro collapse. Not financial advice, do your own research. Not FUD, I am long LUNA, just stating my own experience as of late.
Edit: going from what you’ve linked the amount pumped into the market would roughly counter the imbalance on curve.