Cryptomena terra luna lost 99 percent of its value in two days – REFRESHER

“I lost more than $ 450,000, I can’t pay the bank. I’ll lose my house soon. I will become a homeless person. The only way to get out of this is to commit suicide, ”says one of the many users who have lost all their savings in recent days on the cryptocurrency terra luna forum. Not some of them, but often up to 99 percent of all money invested. At the top of the discussion forum today is a text that links investors to hotlines where psychologists help people prevent them from taking their own lives. hours practically 99 percent of its value. Someone could easily film the whole story in a Hollywood blockbuster, because in the background of the large-scale fall in the value of cryptocurrencies, there was probably someone who knew in advance what he would do with his actions and how well he could “grease his pockets”. The attack on the cryptocurrency terra luna is already likened by many to the black Wednesday of 1992, when George Soros cleverly attacked the Bank of England and earned more than a billion dollars for his skill and ability to predict market developments. The victim is now a terra destroyed by the “George Soros-style” attack. The cryptocurrency terra was created to simplify monetary transactions between the world of cryptocurrencies and common money such as the dollar or the euro. “Terra is programmable money for the Internet that is easier to spend and more attractive to own,” shines today on the official website of Terraform Labs, which is behind the project. The Terra project has its own cryptocurrency called luna, which at the end of 2020 received its sibling pair in the form of the stable currency UST aka terraUSD. Stable currencies, and therefore stable coins, function as a safe haven in the world of cryptocurrencies, as they maintain the same value as one dollar or one euro. Older stable currencies such as the USDT or USDC tend to cover the number of their coins in circulation with the same number of dollars or euros in their reserves. The main idea is that if you convert your one dollar into one USDC, the company will keep your dollar in reserve, “go out” a cryptocurrency for you and you can trade with it. Algorithmic stable currency covered by code instead of money However, the terra project came up with a new idea. He invented an “algorithmic stable currency” that maintains the same value as the dollar or the euro, but has no equivalent of that money in its reserves. TerraUSD alias UST operated in tandem with the cryptocurrency of the moon. “To buy the UST, you must first create this coin. You will pay for this with a luna coin at the current market price. The protocol will take your moon coins, destroy them, reducing their total number, and cause a slight increase in its price. It also works the other way around: you have to convert the stable UST menu to create a moon. These coins are subsequently destroyed and the price of UST will rise a bit, “Decrypt explains the mechanism for maintaining the price balance. The balance was to ensure that even if the price of UST fell to $ 0.95 for a while, investors could buy it at that lower price, but they could still exchange it for a one-dollar moon. With this conversion, they automatically reduce the number of USTs, which, according to market logic, should increase the price until they settle back against the dollars and make a profit at the same time. George Soros-style attack
In theory, this algorithm looks good. It has long seemed that terra will work smoothly not only on paper but also on the real market, but there is always someone who is able to find a crack in the project and use it to make a huge profit. This most likely happened in the case of terry, writes Coindesk. Although there is as yet no detailed analysis of how the terra luna disintegrated day by day, the cryptocurrency analyst Onchain Wizard briefly explained in his Twitter posts what he thought had happened. He compared the attack on the cryptocurrency to George Soros’ attack on the Bank of England, which earned more than a billion. According to the analyst, the principle of the attack is simple. Someone noticed that terra, as an algorithmic stable coin, began buying bitcoin in early 2022 to boost investor confidence and place it in its reserves to correct possible market fluctuations. Terra bought more than $ 1.1 billion in bitcoin reserves. Bet on the bitcoin to fall … and then let it fall on its own? The analyst estimates that the attacker could have borrowed up to 100,000 bitcoins, so he could bet about $ 4.2 billion on the future drop in the price of bitcoins. In the following steps, he used the weaknesses of the algorithm on which terra works. The attacker’s goal was apparently to create a “bank run”, describing a situation in which the bank’s clients (in this case, investors in Terre) panicked because they thought the whole project was heading for zero. We don’t know when the attacker borrowed 100k BTC to start the position, other than that it was sold into Kwon’s buying (still speculation). LFG bought 15k BTC between March 27th and April 11th, so lets just take the average price between these dates ($ 42k). pic.twitter.com/eMxeA3cvvm— Onchain Wizard (@OnChainWizard) May 10, 2022 The attacker gradually bought a billion UST coins, used the way he overtook the liquidity transfer in Terry’s background, and gradually began selling UST coins to create panic. When a third of its position caused UST to fall from one dollar to ninety cents, it went to the centralized Binance exchange, where it slowly sold hundreds of millions in UST, flooding the network, causing chaos and investors looking for ways to sell UST before it falls deeper. . It is not known who was behind the deliberate attack on Terra, but conspiracy theories are already emerging on social networks that they may have been large investment firms that realized how easily they could manipulate the market. However, this speculation will probably not be confirmed or refuted by anyone in the near future. The investment company Blackrock even “categorically refused” that it would have its fingers in the collapse of the UST. Rumors that we had a role in the collapse of UST are categorically false. In fact, BlackRock does not trade UST. https://t.co/0kjfwaZbwV— BlackRock (@BlackRock) May 11, 2022 The suspect has already been guaranteed a 20 percent interest. He knew that Terra had bought bitcoin in his reserves precisely for crisis situations, so Terra began selling bitcoin on the market to prevent UST from falling below one dollar. This created selling pressure on the price of bitcoin alone, which caused a rapid drop from above 40,000 to the current price below 30,000. As the attacker predicted a huge amount of money in advance that the price of bitcoin would fall, he was able to close his “short position” after the bitcoin collapse and take home hundreds of millions of dollars. Terra shot herself not only in the way her algorithm worked, which generated UST’s massive sales of huge amounts of new moon coins, flooding the market and causing her value to fall by 99 percent, but also with her Anchor trading platform. If he converted his money to UST and put it in Anchor, where he didn’t move, Terra promised a guaranteed 20 percent annual interest rate. The guaranteed 20 percent interest sounds too good to be true, so the attacker reckoned that Anchor was unable to meet the demand for getting rid of UST and the moon after a while. So how much did our attacker make? There aren’t details on where they covered obviously, but if they are able to cover (or buy back) the entire position at ~ $ 32k, that means they made $ 952mm on the short.— Onchain Wizard (@OnChainWizard) May 10 , 2022 The fall of the UST’s “stable currency” value from one dollar has worried people who have withdrawn their savings from Anchor and tried to get rid of the UST, which has put additional pressure on the lune’s new coins. An endless carousel set in, which could not have failed otherwise than by a catastrophic fall of the moon towards zero. After a few hours, the attacker could rejoice that everything turned out as he had imagined. The pressure to sell UST and the moon destroyed the value of the two currencies, which Terra saved by selling bitcoin from its reserves, thus reducing its value. According to Onchain Wizard, the attacker could take away about $ 800 million after deducting all costs for fees and losses from the attack.