Over the past week LUNA experienced a massive crash because its algorithmic stable coin UST lost its peg. The coin was delisted from major exchanges due to the incident. Investors also lost a lot money.
After the unprecedented crash, Terra founder Do Kwon began to expose some plans made towards recovery of the supposed failed project. Binance relisted the project and it skyrocketed by over 1800% causing an uproar as other cryptocurrencies were down while LUNA was flying.
The design flaws in LUNA & UST has shown that minting doesn’t create value but weakens it.
The Incentivisation created in the LUNA/UST ecosystem was just a drive mechanism.
Only utility driven projects will stand the test of time.
Again, don’t BUY a sinking boat.
— WillyWealth Trading (@willywealthT) May 14, 2022
The situation brings a popular phrase to mind, Is this a dead cat bounce? a temporary recovery before the continuation of an imploding demise.
It is worthy of note, that some of the recovery plans have been implemented and it is also safe to say that it might not be enough to save the project. Burning more coins amongst others is just a little piece of the puzzle that must be solved. LUNA’s supply keeps increasing even when they announced that minting has stopped. It has become unclear how the situation is being handled.
Terra’s ecosystem has exposed key design flaws in the algorithmic based stable coin UST which has led to the unprecedented crash of the project despite their team’s scrambling effort to keep the project alive.
You can’t mint your way out of bankruptcy all the time.
This LUNA rally is a dead cat bounce.
There are better projects with solid and proven infrastructure to invest in.
Don’t gamble with your life savings.#lunacoin #LUNAUSDT
— WillyWealth Trading (@willywealthT) May 14, 2022
It is our opinion that investors should be wary of this development and not jump in to catch quick gains.
Featured image source: shutterstock.com
