Following last week’s historic collapse of Terra’s stablecoin, UST and native token, LUNA, crypto leaders have emerged to offer their perspective.
And they are not holding back.
Ethereum creator Vitalik Buterin criticized the entire premise of UST, calling it from inception, intentionally misleading and inherently flawed.
“‘Algostable’ has become a promotional term used to legitimize non-collateralized stables by placing them in the same bucket as collateralized stables like RAI/DAI,” Buterin tweeted yesterday.
UST is not backed by cash or assets like other major stablecoins. Instead, an algorithm associates the value of the UST to the LUNA via a burning/minting mechanism designed to keep the UST at $1. That mechanism collapsed last week, wiping out UST and Luna, and with them nearly $40 billion in value.
Earlier this week, Terra ensured investors were as stable as the UST asset-backed stablecoins. Do Kwon, the co-founder of the troubled Terra, put it in his Twitter bio during the crisis: “The Master of Stablecoin.”
“We need to emphasize that the two,” Buterin said, referring to algorithmic stablecoins and asset-backed stablecoins, “are very different.”
After a few days of involuntary silence, Do Kwon on Friday had a . reappeared with new plan To revive Luna. The idea involves permanently dropping UST and resetting LUNA to a 1 billion token circulation, with tokens to be distributed to both former holders and current holders, erased from last week’s events.
‘wishful thinking’
Within hours, Changpeng Zhao, CEO of Binance, the world’s largest cryptocurrency exchange, said that such plans are not on arrival.
Zhao, who rarely commented on the handling of cryptocurrencies traded on his company’s platform, made an exception yesterday. Tweet That “forking” LUNA, or splitting the blockchain to create another version, “won’t work.”
“Forking new forks doesn’t give any value,” Zhao said bluntly. “It’s wishful thinking.”
zhao elaborated That the fatal flaw of such a strategy is Kwon’s failure to understand that “covering (printing) the coin doesn’t create value, it just dilutes existing coinholders.”
Zhao openly questioned the transparency of Kwon and Terra’s handling of the crisis triggered by the collapse of UST and Luna. kwon Claimed Earlier last week, billions in bitcoins stored by Terra’s nonprofit Luna Foundation Guard (LFG) were used to protect the US.
blockchain data revealed LFG actually sent billions of bitcoins to Zhao’s own Binance and Gemini accounts last week. But it remains an open question whether those stores were actually sold to buy UST.
“Where Are All the BTC Used as Storage?” zhao want to know,
Friday when Terra temporarily stopped As LUNA Crashes to Zero, Its Blockchain to Reduce the Risk of Governance Attacks, Binance remove LUNA and UST are both removing coins from the margin and spot markets. It then resumed trading later that day for both, but specifically against Binance’s own stablecoin, BUSD. that day, zhao tweeted“I am deeply disappointed with how this UST/LUNA incident was handled (or not handled) by the Terra team.”
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