- LUNC is down by 18% in 24 hours
- LUNA is up by 59% in 24 hours
A mathematics and philosophy expert, Nassim Taleb, has scored the Terra team low in their quest to build a working blockchain. In a May 13 post on Twitter, Taleb said that the LUNA situation is just like an electric guitar repair man performing cardiac surgery. Taleb said that from what has been on ground in LUNA, that the makers of the contract are people who do not know anything “about finance & feed-back loops”
His exact post says:
“LUNA is the equivalent of having an electric guitar repair person perform cardiac surgery.”
He said that users and institutional investors could not notice that something was wrong with LUNA because they didn’t know anything about finance.
Aware of LUNA Flaws
In their reaction to the post, investors such as Julien Perrochet, said that there are many others who knew that something was wrong with LUNA, but didn’t care enough to take action.
They made reference to analysts who warned about the risks of investing in LUNA, even when the system seemed to be working. According to Tushar Jain, the reflexivity of UST has always posed an existential threat to LUNA. In September 2021, Jain said that a fall in the price of LUNA could panic investors to redeem their UST for $1 of LUNA to sell their LUNA. He said that the selling pressure would make the system insolvent.
On their part, Algo Trading said that LUNA is designed like a ponzi. He said that UST maintains its stability through a swap that makes it possible to redeem UST with $1 worth of LUNA.
UST is backed by LUNA, LUNA is backed by Anchor, Anchor is backed by 20% yield, 20% yield is backed by greed.. what can go wrong😅
— Eric Chang (@tenzinchang) May 13, 2022
Another comment from Eric Chang says:
“UST is backed by LUNA, LUNA is backed by Anchor, Anchor is backed by 20% yield, 20% yield is backed by greed.. “
A New And An Old LUNA
LUNA lost 100% of its market value after the Terra stablecoin, UST, dropped below $1. The stablecoin which was pegged to the dollar was not backed by any assets. The attempt by LUNA Guard Foundation, the entity behind the UST to restore the peg failed. This was after pumping $750 million in BTC into the coin market.
The Terra team proposed a recovery plan, Proposal 1623 which was launched on May 28. The effect of the new proposal has not been evident at the moment, as the new LUNA lost 70% of its market value on the day of launch. The old LUNA, LUNA Classic (LUNCH) is down by 18% in the past 24 hours, while the new LUNA (LUNA) is up by 59% in the past 24 hours.