VegaX Flash News Report: Bank Run on Terra’s UST— May 2022

VegaX Holdings Flash New Report: May 2022 Bank Run on UST

Setting the Scene

What happens when the music stops?

Who Profits? Follow the Money

  • The “attacker” cleared out liquidity pools on Curve Finance, which was ~$300M UST.
  • Then they started dumping the UST which caused people to panic and sell their UST — this all caused a minor de-peg.
  • UST backers like Jump and LFG started selling other crypto-assets like ETH and BTC to buy UST and bring the peg back.
  • That may have been exactly what the attacker wanted because it seems like they were actually shorting BTC (aka betting the price was going to go down, they anticipated this because they knew LFG would need to sell their BTC to regain peg).
  • Basically — they knew the counterpunch and were going to profit from that too.
  • Mass panic hits and people start selling on exchanges which caused huge congestion.
  • Exchanges halted UST and Luna trade until things could stabilize.
  • This caused even more panic so people started withdrawing even more UST from Anchor, which caused a bank run for the protocol.
  • Over 50% of all funds were withdrawn in the span of 48 hours.

Speculation and Musings

“Never let a good crisis go to waste.”

Conclusions

🚀Better Indexes, Better Returns — VegaX

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VegaX: The Future of Digital Asset Management — Innovation of Proprietary Indices and Next-Gen Digital Asset Management Products. https://vegaxholdings.com

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VegaX Holdings

VegaX Holdings

VegaX: The Future of Digital Asset Management — Innovation of Proprietary Indices and Next-Gen Digital Asset Management Products. https://vegaxholdings.com

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