The main victims of the Terra collapse were retail investors as whales rushed to cash out quickly.
Jump Crypto, the cryptocurrency-focused subsidiary of Chicago-based proprietary trading firm Jump Trading, has finally spoken Regarding the explosion of Terra, despite being one of the major proponents of the controversial project.
It added that the meltdown was largely triggered by a combination of trades in the USTw-3CRV curve pool.
The pool, which is supposed to be a 50:50 ratio of UST and 3CRV, lost its balance and depth after TerraForm Labs (TfL) withdrew UST liquidity and two wallets placed large UST sell orders.
The peg also came under severe pressure due to a large amount of outflow from the anchor protocol. These outflows were mainly driven by large depositors. In fact, he slashed his UST position by 15% right after the stablecoin lost its peg, the report indicates.
In particular, smaller depositors actually increased their exposure during the event. This indicates that retail investors grabbed the bag after the massive crash.
Since the overall position of retail investors was small compared to crypto whales, they did not manage to make up the difference.The Anchor Protocol, which lured investors with not-so-real 20% interest rates, had regularly faced allegations of being a Ponzi scheme before its collapse.
Following the somewhat anticipated collapse of Terra, the consensus appears to be that the protocol was indeed a scam, with billionaire Bill Ackman claiming that such pyramid schemes threaten the entire cryptocurrency industry.
Senator Pat Tomei of pro-crypto Pennsylvania also said that Terra was a fraudulent project because it promised big returns with its questionable technology.