Two traders are behind the collapse of the Terra ecosystem. It took nearly $200 million to collapse $60 billion. The first manipulations against UST began on the night of May 7 in curve-based liquidity pool 3pool.
Analysts have uncovered who could be behind the collapse of the Terra ecosystem, which has cost the entire industry an estimated $60 billion.
The collapse of the stablecoin TerraUSD (UST) as well as the entire Terra ecosystem, was triggered by just two traders. The Chainalysis analysts announced this in their report.
Terra’s collapse unfolds
According to experts, it all started on the night of May 7 when Terraform Labs withdrew 150 million UST from 3pool’s curve-based liquidity pool in a planned operation. According to analysts, such a large and unique operation increased the volatility of the pool.
Thirteen minutes later, a large trader spotted this error and exchanged 85 million UST for USDC to increase volatility.
Over the next hour, another trader converted a total of 100 million UST to USDC in four tiered trades, increasing volatility.
Result: UST lost parity with the dollar
In response to these actions, Terraform Labs withdrew an additional 100 million UST from 3pool. It is claimed that this was done to “even out” UST’s exposure to other stablecoins.
By this time, however, large transactions, as well as many smaller transactions, had already broken the parity of the UST to the US dollar.
On the same day and on May 8th and 9th, three unknown UST holders converted Tether (USDT) to UST for a total of $480 million to save the project and balance 3pool.
Also on May 9, the Luna Foundation Guard (LFG) sold billions of dollars worth of bitcoin to convert to UST. But by May 10, the reserves were exhausted and the UST price collapsed again.
Recall that in early May, the price of UST rose from $1 to $0.12 on the UST/USD pair. Native ecosystem token Terra was also impacted, losing 100% of the price of the LUNA/USD pair.
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