Cryptocurrency research company Nansen has pointed to four stages of the TerrsUSD (UST) steiblocoin deprivation against the U.S. dollar that occurred two weeks ago.
According to the report, published by the company on May 27, 2022, the theory that UST was attacked by a single entity, which is widely discussed on Twitter, is unfounded.
What actually happened to UST? After weeks of work by our research team, here is a detailed overview of the UST crisis that brought down the Terra ecosystem.
Be sure to retweet it if you find the document informative, too.
According to them, seven big wallets (named as sophisticated traders, “token millionaires,” big DEX traders, etc.) used the unbalanced UST-LUNA design status.
Most likely on May 7, 2022, they began withdrawing UST liquidity from Anchor Protocol (ANC). Prior to the Terra (LUNA) drama, this protocol offered up to 19.5% in APY on UST Stablecoin.
They then began aggressively moving liquidity from the Terra (LUNA) blockchain to Ethereum (ETH) via the Wormhole bridge.
Nansen cited the addresses of seven crypto-kit managed wallets that were instrumental in this process. The owners of these accounts then began exchanging USTs for other stackablecoins in Curve Finance’s (CRV) liquidity pools.
After the cancellation of the UST peg, huge arbitrage opportunities opened up due to “inefficiencies” between the various price sources.
As a result of the events described above, the UST stabelcoin and the Terra asset (LUNA) fell to near zero, prompting Terraform Labs founder Do Kwon to initiate a fork of the network.