I think the broad consensus is that this was a well-orchestrated, and wildly profitable, attack on UST, made possible by the in retrospect boneheaded decision to back up UST by hyper-volatile BTC, which was practically begging for someone to take advantage of the fractional “reserve” of BTC that was supposed to prop-up UST - so it ended up doing the exact opposite, and ended up inadvertently causing this very event.
There’s all sorts of speculations floating around. Frankly, this forum is much more level-headed, well-informed and (mostly) hyperbole-free than most other venues, so I think this is a good place to ask.
What do we know so far, what made this massive depeg come on? And not just once but twice (or thrice, depending on how you look at it) big massive drops.
I think (speculate) that the first big drop down to 0.69 was the planned & coordinated attack (if there even was one, I think that is certainly plausible and likely). Then the next two drops down to 0.29 was the run-away train of fear and retail investors panic selling, making arbitrageurs and others boatloads of money. That’s when the whale was done, but a bunch of sharks went on to clean up the remains of the badly bleeding retail depositors/investors.
And what do we know about what is helping the peg recover now? LFG was supposed to be getting $1B+ of external funding to help to prop it up. Was that ever consummated and did that ever happen or no? (Though I guess if it did, and especially the volume of it, they’d want to keep quiet until this is well over.)
If the recovery now is simply all the nervous nellies done their selling, while the bunch of sharks who attacked the bleeding remains after the whale have finished their munching also, and the market starting to organically recover and find a longer-lasting equilibrium all on its own (which I think will, if not forever, then for a long time, have a certain risk premium built-in for UST, though I hope it’ll be in the 0.9x range), that’s actually a good and encouraging sign. On the other hand, if the recovery is propped up by external funds, that’s also certainly good for the moment, but we don’t know how long it’ll last, though there’s heavy vested interest for someone who’s committed $ Billions to this for it to work.
Anyhow, just looking for some more informed takes on this than mine, and especially for any factual (on chain or elsewhere) breadcrumbs, that may indicate what went on, and what is going on now.