The TeraUSD (UST) fall has rocked the entire crypto ecosystem for a month and speculation and conspiracies engulf the space after the demise of the biggest crypto of all time.
More details regarding the cause of the death spiral of TeraUSD (UST), a stablecoin belonging to TerraForm Labs, have recently emerged.
In an interview with Korean media source JTBC, a core developer revealed his insights into the fall. Based on their claim, the Anchor Protocol was originally planned to offer a 3.6% interest rate, but it was increased to 20% just a week before the launch to attract more buyers.
However, TerraForm Labs CEO Do Kwon decided to change everything a week before the initiative was launched, as part of an effort to lure more investors into Terra.
“I didn’t know it would have such a huge interest rate.” Set it to 20% only a week before the holiday,” said the employee, who solemnly called ‘Mr. B’ within the Korean language report.
“From the beginning, I believed it was going to collapse.” (I made it, but it totally broke.)”
first line of defense
According to the report, Mr. B, the main maker of Terra, set Terra’s interest rate at 3.6 percent to keep UST at par with the dollar as all tests beyond this rate resulted in UST falling prior to launch.
Even the 3.6 percent ROI, the core designer said, was too high; Still, they chose to charge an interest rate on the amount that is slightly higher than what typical financial institutions would pay.
Interestingly, the rates were cut because Terraform Labs initially did not have enough finance to pay interest to investors.
Kwon. All warnings were ignored by
Despite all of these issues and the establishment of Terra’s anchor program, the core designer learned a week later that Terra would go ahead with the effort with a 20% return on investment.
“I proposed to CEO Kwon Do-hyong to cut the interest rate just before launch, but it was not accepted,” the developer continued.
“From the moment we built it, I’ve seen it collapse.” I alerted CEO Kwon ahead of time, but he claimed he ignored.”
If Terraform Labs is unable to pay the 20% to investors, Kwon has said that the company will “cut it all,” meaning the initiative will be scrapped.
The UST fell because interest rates were too high with respect to internal funds, losses continued to expand, and it fell all at once due to the smallest change in market conditions.
Meanwhile, attempts to obtain Kwon’s opinion were unsuccessful.
Traces of price manipulation that has been done on purpose
Do Kwon was called to a parliamentary hearing in South Korea in mid-May on the subject. Even court filings revealed that it disbanded Terraform Labs Korea a few days before the LUNA disaster.
It doesn’t stop here—South Korean authorities reportedly summoned employees of TerraForm Labs in May to investigate whether there was purposeful price manipulation and whether the tokens were properly listed.
Amidst all this, the Terra co-founder managed to revive the dormant network with Terra 2.0 (Phoenix-1) on 28 May, aimed at reviving the Terra (LUNA) and TeraUSD coins (UST). There is a new series.
history repeats itself
This is not the first time that Kwan has been accused of being the reason behind the demise of the Terra Ecosystem token. During an investigation last month, a Terra employee revealed that Kwon went ahead and launched Terra, despite massive failures in internal testing.