ViaBTC Capital｜The Collapse of LUNA

Timeline of the Collapse: -In the early morning of May 8, to prepare for the 4Crv Pool, Luna Foundation Guard (LFG), a Singapore-based non-profit that maintains the Terra network, removed $150 million worth of UST from the UST-3Crv Pool. At this time, the TVL of the pool was around $700 million. In other words, it cost only about $300 million to drain this pool. – To keep the balance of liquidity in the UST-3Crv Pool, LFG removed another $100 million worth of UST from the pool. – On the evening of May 8, WhaleTrades, a whale alert account on Twitter, began to “ring alarm bells” frantically: there was a tweet of selling millions of dollars’ worth of UST every hour. – On the morning of May 10, Jump Trading and LFG may have sensed the problem and stopped selling their Bitcoin holdings to provide support for UST’s peg, letting things drift. As a result, UST plummeted all the way to $0.6. – On May 11, UST seemed to be shorted by Soros-style short sellers, and has plummeted to a minimum of $0.2998 (source: CMC) after rounds of underselling. It was a terrifying day on May 11: there seemed to be short sellers deliberately shorting UST and LUNA: – While liquidity is being withdrawn from the UST-3Crv Pool as reserves for the 4Crv Pool, a single wallet dumped $350 million worth of UST on Curve, making UST lose its peg to the US dollar. In response, LFG sold BTC to keep the peg, and then the short seller dump...