UST, a stable coin running on the Terra blockchain (now Terra Classic), was designed to maintain its dollar peg through both algorithmic and trading incentives that included another token, Luna. Terra’s growth exploded among mom-and-pop investors over the past two years, and they benefited from 20% interest rates on their investments from quasi-bank, Anker.
The spiral of UST and Luna falling to zero almost stunned the crypto market. Many questions were also raised over its feasibility. Moreover, the crash also dealt a widespread blow and billions of dollars disappeared within a few days.
Big investors exit outflow
Researchers recently created a report for JumpCrypto, reporting that large depositors of UST exited Anchor as early as May 7, while smaller depositors increased their exposure between May 7 and May 9. Jump reports that big investors in outflow anchor UST off its peg.
JumpCrypto, a firm heavily involved in the dormant Terra blockchain, says that TeraUSD (UST) has lost its peg as a result of large investors exiting Terra-related positions, with smaller investors continuing to buy. Is.
Terra’s bearish report in early May that Jump Crypto, a unit of Chicago-based Jump Trading, published last week. The firm remained silent on Terra’s demise, including Terra’s supporters Luna Foundation Guard. Which allocates its funds to compensate users of UST, or steps taken by the firm in an unsuccessful attempt to restore the coin’s 1:1 peg with dollars.
Anchor Depositors Status
Firm Jump Crypto further acknowledged the findings in Nansen’s report that a blockchain analytics platform, including a handful of wallets linked to crypto lender Celsius, was “significant” as the dollar peg slipped.
The reaction to the first slip on the dollar peg of UST on May 6 saw large depositors drop 15% of their UST positions in the anchor. Whereas by May 6, small depositors or wallets with less than $10,000 in Anchor increase their exposure.
The report further added: “However, their overall position size was smaller than that of medium-sized and large depositors, and was therefore sufficient to counteract the increased risk outflow.”
Also on May 7th the wallet was mysteriously reduced in UST status through a series of transactions involving approximately $85 million. This move resulted in a major disaster. In response to criticism on social media, Citadel Securities and BlackRock Inc. clarified that they were not responsible for and had nothing to do with Terra’s collapse.