Let's go back a bit in history and recall the collapse of the Terra Luna Foundation.
#coolstory #luna #lunc #UST 10.05.22
The scheme turned out to be quite simple; you can dump BTC if you have the money.
One possible scenario is described below:
— Building a position of 1 billion UST on the OTC market
— Borrowing BTC for $3 billion.
— Launching FUD about the peg to UST
— Dumping BTC in the market to intensify the panic
— After LFG (Luna Foundation Guard) withdraws liquidity from Curve, the attack begins:
- The attacker takes all the liquidity from the Curve pool ($350 million)
- Dumps the accumulated 1 billion UST on Binance (resulting in a 1:1 unpegging to the dollar)
Since the Terra market module is set for a throughput of $150 million per day to restore the peg, that would have been enough, but in the Curve pool, instead of $4 billion, there was only $350 million.
The situation escalates, BTC falls, UST loses its peg even more, and LFG is forced to sell BTC to maintain the peg, which puts even more pressure on the price of BTC.
The attacker achieves their goal, as we remember, they short BTC.
Panic forms in the market.
The Terra network is overloaded, withdrawals from exchanges are halted.
Funds begin to leak from the Anchor protocol.
Nothing would have happened if there had been $4 billion in the pool instead of $350 million.
Everything was not by chance…