While this doesn’t address people who were unfairly liquidated due to network congestion or other issues, I do think we need to discuss the value of loyalty.
Many Lenders/Borrowers utilizing Anchor protocol held fast, and are still holding.
By not withdrawing, the vicious downward spiral was that much less vicious.
Rewarding that loyalty might help encourage long-term supporters to remain on the platform, which could hasten a recovery (partial or otherwise).
Could deposits and loans to the protocol which were not withdrawn over the past week be identified, and rewarded in some manner?
Thoughts? I know there’s a lot of doom and gloom out there right now, justifiably so, but in for a penny in for a pound. I’d rather go down fighting than throw away investments.
I expect either no response, angry comments, or just hopeless pessimism, but maybe not everyone feels that way.
Consider creating a term CD that rewards loyalty in addition to the existing ‘saving account’ where some fled at the first sign of trouble, at the cost of other more loyal depositors and endangering the entire Terra ecosystem.
These ‘CDs’ shall earn higher interest than the existing ‘saving accounts’ and with protection on its principle and interest earned (details below).
There shall be a penalty on early withdraws on these term CDs, forceiting interest earned and nulling all protection on its principle in the event like today.
At the end of the term, the CD holders should be made whole on both principle and interest regardless of market conditions. In the event of a UST depeg like today, the CD holders, upon maturity of their CDs, should be paid back in full in another stable coin such as USDT or USDC that is still pegged or in USD.
The fund in the CD accounts should be backed by real assets whose values stay relatively stable and un-correlated to UST or the crypto markets.
The total size of the deposits in CDs should be kept under the size of the assets available to back the CDs up. Once that size is reached, the gate shall be closed for the term and no more CDs can be opened for the period. This can make these CDs a much coveted product among savers, and over time, as the size of the term deposits grow, a fortress upon which to build a larger circulation of UST and which softens the blows from future attacks/attempts to depeg UST.
In the long-term prospective, creating demand for UST is key.
That said, putting on my tinfoil hat, I can’t help but feel that the fact that Mirror exists (where you can easily utilize aUST) is also why the Terra ecosystem was such a target?
Either way there certainly is a need for decentralized stablecoin.
Maybe just not algorithmic, which appears to have been prone to attack.
Too bad they never did get that $10B btc reserve going…Might have made all the difference. Sadly I tapped out at .77 this evening. I feel like a turncoat and it’ll serve me right if the peg eventually restores.
Not really. When BTC value tanks, $10B reserve yesterday becomes $5B reserve tomorrow.
Reserve has to be denominated in the same currency that UST is pegged to, USD. Reserve in a highly volatile, risk-on asset such as BTC is contrary to UST being a stablecoin.
Nate, have you guys considered the biggest factor was allowing a $14BN nuke of capital to just run for the exits at the first sniff of an issue?
If we had incentivized capital controls via boosted time locked yields (30/90 day etc) wouldn’t we have survived this?
The off chain shenanigans didn’t really seem too much of a problem imo. It could have been easily handled if the vast majority of funds were locked in place.
We really should have been implementing the staked aUST asap. this was silly. Honestly from november I thought having devs / etc with over 50% of the voting power was silly and I was right too.
I think at this point, with the collapse in anchors price. It should be that we redistribute the remaining developer anchor to anchor community who are still wanting skin in the game. This would help with any litigation anchor is more than likely going to be facing in the upcoming months.
Cross anchor is still a thing. Also UST as deposits should be disabled at this point. same with borrowing, let everyone exit.
UST is dead by this point. Luna cannot hold any more UST volatility its completely insolvent across all major chains and even in its own ecosystem it’s turning insolvent.
Why did we ignore the bankrun? I think the gravy and promise was too appealing so majority thought it couldnt happen. Turns out a manipulative attack on human emotions can trigger bank runs. We need absolutes not emotions to govern capital. I thought Terra was the solution but when you print 3 bn ust to buy btc and print more to pay out people for no reason it becomes an emotional not logical game.
I couldn’t agree more. I tried to stress a month ago that everyone in here was a technician/mechanic and no one seemed to be versed in behavioral finance. It was ultimately crowd psychology that represented the real risk, even though the various mechanisms were also too loose and didn’t help.
Once Citadel and other CEX’s and hedge funds realized they could spark a bank run, the bait was too tempting. Those guys are celebrating today with massive profits. I heard 8 people have already committed suicide today. Welcome to the best democracy money can buy.
One thing I’d say, with all due respect and gratitude for your help yesterday, is to remember that exiting with size is a different challenge. Many bagholders simply had too much to get out even. I had to face a 23% loss on a big chunk of capital, and I’m a very small fish in the grand scheme of things. There are whales who lost family fortunes, businesses that will be firing all of their employees today. Those are the real victims, even if my 23% (~$20K) loss feels like a lot. I’ve earned $26k total in passive income since 2020, so I guess I still came out slightly ahead. Trading wise I’m only -$5k on the year thanks to some wins in Feb/Mar, and I plan to go back to investing in things that have intrinsic value (e.g. S&P 500; it’s a buy opp right now, ideally a few percent lower).