Nobody is in charge, and nobody is at fault!
“Sorry to those affected” is the kind of response I expect when game servers are down, not exactly what you expect when someone loses a bunch of your money.
Knowing very little about crypto, I found this article relating Luna to the 2008 nonsense helpful: Cryptocurrency's 2008-Style Crash Could Affect Real Markets
But skimming this thread… yeesh.
The thing that sounds most like the Mortgage Backed Credit Default Swaps is the “diversification” they use. The Mortgage backed securities “diversified” by grouping a bunch of similar shitty mortgages together and pretended that that reduced risk, not acknowledging that systemic issues could cause all those mortgages to fail at the same time.
Diversifying Terra/Luna by using Bitcoin sounds like a very similar approach: diversify with another asset in the same class, not acknowledging that systemic issues could cause all crypto to devalue at the same time. It works fine, until it doesn’t.
In more crypto rediscovering the flaws in conventional finance and failing to learn the lessons, this is basically a recapitulation of what happened with Libor fallbacks in the bond and swap markets. Except even those deals actually had fallbacks, they just weren’t what people wanted them to be.
“expectation that (x) would behave as expected”?
I put that excuse on the same level as “failed to sanitize inputs”.
I mean, in practice this has been pretty close to Little Bobby Drop Tables for ol’ $LUNA.
Lantz
3111
The sad thing is that I think that very very little of these things are mistakes or failures to learn, they are intentionally structured for exploitation. If it’s not basic pump-and-dump, rug-pulls, ponzi schemes, or just outright fraud like exchange owners just taking the money, then a lot of time it’s these complicated systems built to be exploited and then likely hacked by the very people who set them up.
There’s a great aggregator of the various things that you can scroll through to see just how many scams are being run in the crypto space:
Working exactly as designed!
You know, I was just thinking that the other night. There is no way this dude skinned himself completely to keep Luna afloat, I bet he held a bunch of Bitcoin as a parachute. Colour me surprised.
Quaro
3114
Fascinating analysis of Luna a week before the collapse. The two hosts are both completely confused why anyone thinks Luna will work.
Yeah, the sheer speed with which the paired Terra coins went down sure does make you think of more obvious, far less artful scams. This may have been a ponzi. But it also may have simply been a rug-pull dressed up like a ponzi dressed up like some legit thing that found a large number of folks eager to be separated from their money.
Quaro
3116
From the video I just posted, “Why does this seem like a scam? Because people are telling you they can guarantee you a 20% return. That’s the pitch of a ponzi scheme.”
The majority of these popular coins can be stored off the exhanges right? On hardware or software wallets and such? While there of course may be a fee to move it off the exchange to a wallet, why would you keep it on the exchange when at a whim the exchange can reverse transactions!
I mean, all algorithmic stablecoins are inherently Ponzi schemes by design. It’s how they “work”
I love this line from the article:
This delicate balance of supply-and-demand worked for a while, but has now resulted in a “death spiral”…
This is a thing that can be said about every Ponzi scheme ever: it’s a delicate balance of supply-and-demand until it isn’t.
