Erik Weijers, 10 months ago
The success story of Terra (LUNA) also arouses suspicion - or envy? One skeptic decided to challenge Terra's founder, Do Kwon, on Twitter: I bet you 1 million that LUNA's price will be lower in a year than it is today. Do Kwon accepted the bet. Not long after, the stakes were raised with another 10 m. Get your popcorn!
The challenger, who on Twitter goes by the name of Sensei Algod, has his doubts about how the price of UST is kept stable. UST is the popular stablecoin of Terra's ecosystem. The total amount of USTs sits at over 15 billion, putting UST on the edge of the top three of all stablecoins. UST's price is kept stable by a feedback mechanism whereby users who put up collateral are financially rewarded if they make this collateral available to burn UST (if UST is slightly too low in value) or top it up (if UST is slightly too high).
Sensei Algod doubts whether this mechnism is sufficiently robust and also whether the 19.5% interest rate that depositors of UST are now getting on the Anchor protocol is sustainable. The anonymous Twitter user expects that there will come a point where UST owners dump their coins and there is not enough LUNA to stabilize the price. Incidentally, Terra recently announced that it is building a 10 billion reserve of Bitcoin as an extra mechanism to back up the price of UST.
Why make such a bet on it? Just because, apparently. Do Kwon responded the same day by accepting the bet and sending his million to the designated Ethereum wallet. Provided Terra manages to keep Anchor's interest rate around 19.5%, Kwon has a good chance of winning the bet. In that case, capital will continue to flow in and demand for LUNA will also increase. By the way, Kwon has pledged to donate any profits to charity.
An interesting aspect of the bet is that crypto personality and OG trader Cobie promised to act as an escrow of the wallet. Then a new challenger emerged, under the moniker Gigantic Rebirth, who raised the bet with another ten million - a raise that was immediately called by Kwon. So Cobie woke up that morning with 22 million in his wallet. He made sure it became a MultiSig wallet, so he is no longer the sole escrow.
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