Binance CEO Calls Terra Luna & UST Mechanism “Stupid”
DailyCoin
Published May 23, 2022 07:39AM ET
Updated May 23, 2022 08:00AM ET
Binance CEO Calls Terra Luna & UST Mechanism “Stupid”
In a recent blog post, Binance CEO Changpeng “CZ” Zhao expressed his thoughts on the infamous and turbulent crash of Terra Luna & UST. As part of the breakdown, CZ remarked that every aspect of Terra’s revival plan is flawed in some way.
Changpeng Zhao Points Out Flaws in the Core System
According to the CEO of Binance, it was a mistake to think that minting more UST and allowing an infinite number of LUNA tokens to criculare would somehow increase the value of the UST stablecoin. CZ said: “Printing money does not create value, it just dilutes the existing coin holders”.
Allegedly, Terra CEO Do Kwon staked additional funds in order to back UST in the event of extra volatility. Unfortunately, this did little to help the situation due to lack of exit liquidity. It’s assumed that Terra wasn’t even able to back the stablecoin with its BTC holdings.
The smart move, according to CZ, would have been for Terra to utilize its BTC reserves when depegging was at just 5%. In reality, Terra’s decision makers waited until the company was close to $80 billion down, and only then tried to stage a recover with $3 million. To Changpeng Zhao, the exacerbated the crumbling trust of investors has been a direct result of Terra’s lack of open communication.
Luna & UST Still Near Rock Bottom
Terra’s coins have taken a beating, and the initiated revival plans have yet to bear fruit. At press time, Luna has made modests gains of 16.2% in the last 24 hours to trade at $0.00018946, according to CoinGecko. On a positive note, that’s 18812.7% more than it was valued at 10 days ago, when Terra (LUNA) plummeted to an all time low.
On the other hand, the Terra (UST) stablecoin, which lost its peg and subsequently imploded as the ecosystem collapsed 10 days ago, is trading at $0.066359 at the time of writing, which is just slightly above two cents from its all time low.
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