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Terra’s Rescue Plan: $1.4B UST Set To Burn, While 240 million LUNA Being Staked

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Terra’s Rescue Plan: $1.4B UST Set To Burn, While  240 million LUNA Being Staked

Do Kwon’s first rescue plan included enlarging the base pool, burning UST, and staking LUNA, according to the Terra’s Twitter account. Terra feels that the downward pressure on UST’s peg is diluting Luna, delaying both recovery and producing an excess of UST and that the only way to address this is to burn UST and increase the available pool of Luna.

Proposal 1164, Do Kwon’s original Terra approach from May 11, is discussed in this thread. The idea would improve the algorithmic stablecoin UST’s balance by increasing the currency’s base pool. The proposition has earned 220,000 votes or more than half of the total.

“The primary obstacle is expelling the bad debt from UST circulation at a clip fast enough for the system to restore the health of on-chain spreads,” said Terra in a Tweet.

As a result, three emergency steps must be performed, one of which focuses on increasing UST burning:

The so-called Agora Proposal vote is approaching, according to Terra Research forum user “The Intern.” The entire amount of UST incinerated should be 1.4 billion UST, or “11 percent of the existing UST obligations,” according to the site.

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In conclusion, the team believes that increasing the coin’s basic pool and burning more will save UST.

Point three, including the staking of 240 million LUNA, is said to bolster the TERRA ecosystem’s network governance.

However, some experts believe that investing 240 million LUNA (approximately $200 million) is insufficient to salvage the project:

1/ The prevailing peg pressure on $UST from its current supply overhang is rendering severe dilution of $LUNA.

The primary obstacle is expelling the bad debt from UST circulation at a clip fast enough for the system to restore the health of on-chain spreads.

— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) May 12, 2022

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A token burn is an act of removing cryptocurrency from circulation on the blockchain because it would enhance the value of the existing blockchain, it might be considered a deflationary event. It would be analogous to a stock buyout for token holders.

Terra has announced to burn approximately 1 billion UST (about $690 million) in the community pool while raising the Base Pool of LUNA accessible to 100 million, bringing the total minting capacity to over $1 billion. This will assist speed up the flow of UST out of the system, bringing it closer to its peg and driving down the price of Luna.

Currently, the burning of UST is too slow to keep pace with the demand for excess UST to exit the system, which is hindered by the BasePool size,” reads the proposal.

“Eliminating a significant chunk of the excess UST supply at once will alleviate much of the peg pressure on UST.”

Some comments on the proposal speculated on whether this was due to a defect in Terra’s software or if it was a result of a larger market slump triggered by the price of bitcoin falling.

This proposal can be voted on by network validators. The Yes side has garnered 50.47 percent of the vote, while the abstention side has received 49.1 percent, according to a vote tracker. The pass criterion is 50 percent, and 87.8 percent of eligible voters have already voted.

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British Virgin Island Orders Liquidation For Three Arrow Capital: Reports

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British Virgin Island Orders Liquidation For Three Arrow Capital: Reports

According to Sky News reports, the British Virgin Islands has ordered cryptocurrency hedge fund firm Three Arrows Capital (3AC) bankrupt. This move will worsen the crypto space’s instability.

As per the allegation, associates from Teneo Restructuring in the British Virgin Islands have also been connected to managing the Singapore-based company’s bankruptcy. Recently at the start of this week, Voyager Digital announced that it had served a consent order on Three Arrows Capital.

According to the company, one of its subsidiaries sent 3AC a refusal warning for failing to pay off a debt. The debt contains 15,250 Bitcoin and $350 million in USDC, totaling approximately $660 million.

According to the study, insolvency might be a turning point for the fast-developing crypto industry’s future. Nevertheless, the initial financial consequences for Three Arrows’ creditors were unknown.

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As per the previous reports, the Three Arrows Capital’s investments were quickly liquidated by crypto exchanges FTX, Deribit, and BitMEX.

Did Three Arrows Company Use Trader’s Money To Hold UST?

The failure of LUNA and UST in May has triggered a catastrophic scenario for Three Arrows company. The organization is claimed to have purchased capital from investors and invested them in the anchor protocol.

There is widespread criticism that Three Arrows neglected to notify traders of their UST holdings. The firm is accused of using counter-party money to develop a massive UST holding in anchor protocol.

So, what are your views? How bad will this update impact the broader crypto market?

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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Is Terra Labs Involved in Price Manipulation With $3.6B USDT & UST? Decoding the Truth

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Is Terra Labs Involved in Price Manipulation With $3.6B USDT & UST? Decoding the Truth

Terra Labs may have roughly $3.6 billion in USDT and UST, as shown in a CoinDesk Korea article. According to the news source, the money could be used for exchange and DeFi price gouging or financial fraud.

Nevertheless, officials will need to verify the same with exchanges like Binance, Coinbase, Huobi, and Kucoin.

Do Kwon, CEO of TerraForm Labs, has so far declared his assets via his SNS or Terra Foundation. Among these are LUNA (Terra), UST (Terra USD), and BTC (Bitcoin). In the event of UST (Terra USD) collapse, the company was expected to safeguard prices with the currency owned by them.

On the other hand, on-chain data analysis indicated that TerraForm Labs and Luna Foundation Guard (LFG) wallets also had a substantial quantity of money from unidentified resources.

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The entire amount of illegal funds found throughout this way totaled $3.6 billion. This also includes UST (Terra USD) and USDT (Tether). The funds has been used to influence markets and commit fraud for the present LUNC (the old LUNA) on DeFi and regulated exchanges, according to the investigation.

Once that Terra project went down on May 7, blockchain security firms Uppsala Security and Coindesk Korea, with the help of on-chain data forensics, investigated how the network went down.

Investigators tracked the movement of money towards a wallet that multiple analysts have claimed as the source of the Terra crash. 0x8d47f08ebc5554504742f547eb721a43d4947d0a is the wallet address.

As a result, it confirmed that Terraform Labs and Luna Foundation Guard had moved $7.4 billion in USDT, USDC, and UST into two Binance wallets. On-chain data was utilized to prove that the wallet was held or managed by (LFG).

Uppsala Security and CoinDesk Korea conducted further on-chain data analysis to track the passage of unknown funds valued at around $3.6 billion. Now there is unexpected evidence of UST collapse. 

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On May 6, a day before LUNC fell, 300 million USDTs (approximately 380 billion Won) were placed into an unidentified LFG exchange wallet, which was later discovered to have fled to another Binance Exchange Wallet.

This money can no longer be tracked via on-chain data analysis since it was moved from the exchange wallet.

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Hedge Funds Working to Systematically Destroy USDT’s Liquidity: Tether CTO

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Hedge Funds Working to Systematically Destroy USDT’s Liquidity: Tether CTO

Today, Paolo Ardoino, Tether’s Chief Technology Officer, responded to what he described as “public and planned” attacks against USDT by several hedge funds. He stated that they might have done this to propagate more FUD in the aftermath of TERRA/LUNA’s demise.

Are Hedge Funds “Sacred Heroes”?

USDT’s claim to be the most stable coin linked to the US dollar has recently been questioned. Recent developments, such as a new priority for USDC and USDT’s continual depeg, have aroused suspicions in the cryptocurrency world.

Paolo Ardoino describes the mechanics of the “public attacks” on USDT in a lengthy conversation on Twitter, claiming that hedge funds have worked to destroy USDT liquidity by short-selling extensively and further re-purchasing at a discounted cost.

He further stated that the hackers have not stopped their assaults yet.

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Tether’s treasury bills commitment has been decreased from $45 billion to $8.4 billion, according to Ardoino. However, he underlined Tether’s continued support and took a dig at hedge funds that have previously struggled, claiming they are seen as “sacred heroes” in the business

Challenges Are Inevitable For Any New Industry

In an interview with CNBC, Reeve Collins, co-founder of Tether and CEO of BLOCKv, described the budding DeFi market, adding that challenges are inevitable whenever a new industry emerges. He also addressed FTX’s recent rescue of certain struggling crypto startups. 

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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