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In a tumultuous week for cryptos, the TerraUSD peg with the dollar shattered and Terra LUNA collapsed.
Mid-week, the message was of hope, with Terra Lab CEO and co-founder Do Kwon talking of an imminent fix.
TerraUSD stabilized at $0.1 levels, while LUNA floundered at $0.0001 levels after delistings by major exchanges.
Terra Lab CEO and Co-Founder Do Kwon went dark on Twitter following the collapse of stablecoin TerraUSD (UST). This week, UST de-pegged from the dollar in catastrophic style, with UST tumbling to a week low of $0.0437.
The impact on the broader crypto market was significant, with as much as $722 billion wiped out before a partial recovery ensued. On Thursday, the total crypto market cap sunk to $1,082 billion, its lowest level since February 2021.
While the broader crypto market took a hit, Terra LUNA was the biggest victim, falling by close to 100% to $0.0001 levels.
Hopes of a re-peg lingered mid-week, following messages from Terra Lab CEO and co-founder Do Kwon.
Terra Lab CEO and Co-Founder Do Kown Returns to Twitter
Following a series of tweets on Wednesday, Do Kwon went Twitter dark until this morning.
The Terra Lab CEO started a series of tweets by saying,
“I’ve spent the last few days on the phone calling Terra community members – builders, community members, employees, friends, and family, that have been devastated by UST depegging.”
“I am heartbroken about the pain my invention has brought on all of you.”
Do Kwon followed the initial tweet with five others, discussing proposals on possible options to move forward and his views on decentralized economies.
He also stated that,
“Neither I nor any institutions that I am affiliated with profited in any way from this incident. I sold no luna nor ust during the crisis.”
3/ Neither I nor any institutions that I am affiliated with profited in any way from this incident. I sold no luna nor ust during the crisis.
— Do Kwon 🌕 (@stablekwon) May 13, 2022
For the Terra Lab community and crypto investors that suffered, the possible way forward is of more interest.
Earlier in the week, Do Kwon had provided investors and the community some hope before going silent.
On Tuesday, Do Kwon advised the markets that a fix was imminent, tweeting,
“Close to announcing a recovery plan for $UST. Hang Tight.”
Do Kwon followed this, tweeting,
“Getting close… stay strong, lunatics.”
Getting close … stay strong, lunatics
— Do Kwon 🌕 (@stablekwon) May 10, 2022
Do Kwon Terra Ecosystem Revival Plan
Digesting proposals from the community, Do Kwon shared his views on a way forward in a Terra Ecosystem Revival Plan.
He led into the possible options by saying,
“Even if the peg were to eventually restore after the last marginal buyers and sellers have capitulated, the holders of Luna have so severely been liquidated and diluted that we will lack the ecosystem to build back up from the ashes.”
He went on to say,
“While a decentralized economy does not need decentralized money, UST has lost too much trust with its users to play the role.”
Do Kwon then highlighted the reasons for preserving the Terra ecosystem and its community before proposing a way forward for the community to form a consensus.
The proposals included,
A 40% allocation (400 million) of one billion tokens to Luna holders before the de-pegging event.
400 million tokens (40%) to UST holders pro-rata at the time of the new network upgrade.
100 million (10%) to Luna holders at the final moment of the chain halt.
100 million (10%) to the Community Pool to fund future development.
The tweets followed news of a global asset management company entering talks to aid Terra Lab in restoring the UST peg.
Swiss Asset Management Giant GAM Holding Refutes Terra Lab Talks
On Thursday rumors hit the wires of Swiss Asset Management giant GAM entering into talks with Terraform Labs in a $3 billion UST rescue bid.
Media outlets reported GAM announcing that it could invest between $2-3 billion to burn excess supply of UST to help Terra restore the UST’s peg to the dollar.
The story turned out to be false, however. On Friday, GAM Holding AG announced that it is not in negotiations with Terraform Labs to support the Luna stablecoin.
The short statement stated,
“A press release purporting to come from GAM Holding was issued at 23:00 UK time on 12 May. There is no truth in the story and GAM did not issue a press release. GAM has strict controls on the dissemination of press releases, and we are investigating the source of this story and how it became to be published.”
The refute removed any hope of a quick fix and a LUNA and UST recovery.
At the time of writing, LUNA was up 63.6% to $0.0001949, with TerraUSD up 26.8% to $0.1625.
This article was originally posted on FX Empire