TerraUSD (UST) losing its $1 peg and falling to $0.03 and the crash of Terra (LUNA) to $0.0001372 were two events that shook the crypto community.
UST (now rebranded as USTC or TerraClassic USD) is an algorithmic stablecoin backed by the collateral token Terra (now rebranded as Terra Classic or LUNC) fell to only a few cents, causing many investors to lose their savings.
This significant loss is because stablecoins are seen as a safe haven for crypto holdings due to their very low volatility, allowing their value to stay very close to a dollar despite market conditions, thus its attractiveness and impact.
TerraUSD (rebranded to TerraClassicUSD) has lost its $1 peg and is only worth a few cents, while Terra (rebranded as Terra Classic) is now worth less than 1 cent – images from coinmarketcap.
Due to the major impact of UST losing its peg and the collapse of LUNA, Nansen, a blockchain analytics platform, delved into the on-chain data to discover what may have caused the stablecoin to lose its peg. Its analysis shows that more than one actor was responsible for the collapse.
The Nansen report found a small number of addresses had taken advantage of the weaknesses in the Terra ecosystem. These actors exploited arbitrage opportunities because of the poor liquidity of Curve (CRV) pools underpinning the TerraUSD (UST) peg.
Nansen’s findings debunked the theory that a single hacker or attacker destabilized UST. Nansen instead identified seven addresses as being involved in UST losing its peg, with many of them being big players with large token holdings.
A total of seven addresses have been discovered as being implicated in the UST peg loss, with several of them being substantial token holders.
According to the report, UST was withdrawn by those wallets from Terra’s Anchor protocol using the Wormhole infrastructure. Transferring those funds from the Terra blockchain to Ethereum. In case…
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