As the Terra ecosystem stablecoin UST raged over the weekend, LUNA also slid frantically, losing roughly 95% of its value.
Efforts to rescue UST continue as LFG, the entity that acts as a resolution protocol, emptied its treasury wallet of all its Bitcoin. Rumors are now circulating that the organization wants to raise $1 billion to help its free fall project.
But what about the multi-million dollar bet Do Kwon made recently?
LUNA, which is owned by TerraUSD, plunged from $87 to the press price of $4.5 in less than a week. This may not be the best time to remember the bet made by the outspoken founder of Terraforms Labs, Do Kwon.
Almost two months ago, Kwon accepted a $1 million bet against a community member, “Sensei Algod”, if LUNA’s price would be higher in a year, that is, more than $88. The founder later said yes to another bet from the pseudonymous cryptocurrency trader “GCR”, only this time, the stakes were 10 times higher. Soon, Kwon transferred $10 million worth of stablecoins to keep on escrow pending the outcome of the bet.
Following the latest turn of events, Sensei Algod saying that even if the peg is restored, confidence is still lost while questioning whether LUNA will ever recover from the accident. GCR, for its part, had proposed bets of $50 million and $20 million shortly after the first, but Kwon did not respond. Now the user has updated the original bet: short LUNA for $10 million.
Cryptocurrency researcher Hasu, who previously warned that unsecured stablecoins “can’t work” saying that as a stablecoin issuer, the moral choice will be to defend UST by holding the treasury, even if it means LUNA going to zero.
Despite the current bearish outlook, many believe that LUNA will rise again. One of them is CNBC Crypto Trader host Ran Neuner, who tweeted,
“Each attack makes LUNA more resistant. It happened to BITCOIN many times in the early days. It’s part of the process!”
While the algorithmic stablecoin has gained significant momentum, it has also managed to turn heads among critics. Many of the latter cohort believe that the problems with assets like UST are obvious.
Mainly, the reasons are two: it is not backed by a reserve and specialized algorithms cannot always guarantee that the market works. Last year, Dallas Mavericks billionaire owner and investor on ABC’s “Shark Tank,” Mark Cuban, said he lost money when algorithmic stablecoin IRON de-pegged from the US dollar following a big sell-off by big investors. . Kwon, however, is not intimidated by these narratives.
Recent market conditions have put enormous pressure on the TerraUSD pair. And what many feared finally happened. Not one, but two major disengagement events.
Critics noted that Terra’s contingency measures could add to the current selling pressure in the market and drive the price down even further. However, Kwon shared the founding partner of Delphi Ventures, José Macedo’s tweet that says: “LFG made UST stronger, but also temporarily more centralized.”
SPECIAL OFFER (Sponsored)
Binance Free $100 (Exclusive) – Use this link to sign up to receive $100 free and 10% off Binance Futures first month fees (terms).
PrimeXBT Special Offer: Use this link to sign up and enter the code POTATO50 to receive up to $7,000 on your deposits.
This post Terra (LUNA) Drops 95% Weekly, What Does It Mean For Do Kwon’s Billion Bet?
was published first on https://cryptopotato.com/terra-luna-tumbles-95-weekly-what-does-it-mean-for-do-kwons-multi-million-dollar-bet/