The Dramatic Collapse of Terra Luna: Could the same happen to NEAR?

Правка en1, от Agnimandur, 2022-06-03 05:34:40

Background

Recently, it was announced by MikeMirzayanov that NEAR would be contributing to the funding of Codeforces. Clearly, the influx of additional funding was very important to Codeforces. In this blog I want to look at the NEAR cryptocurrency in more detail, and analyze the possibility of a complete collapse.

The Story of Terra Luna

Luna Price Graph Between May 5 and May 12th, the cryptocurrency Terra Luna lost all of it's value: wiping $45 billion off of the crypto market.

What were the "fundamental design mistakes" (according to the Binance CEO) of Terra Luna? Perhaps simply the entire idea of an algorithmic stable coin.

A "stable coin" is merely a cryptocurrency whose value is supposed to remain fixed, usually relative to the dollar. For example, the stable coin USDC has had a maximum price deviation of only a tenth of a percent from its pegged value of 1 US dollar.

The so-called breakthrough of Terra Luna was a "decentralized" stablecoin that was not tied to a governmental currency. The blockchain was home to two cryptocurrencies: Terra (UST), which was supposed to be a stablecoin fixed at 1 dollar, and Luna (LUNA) which was supposed to be a normal volatile cryptocurrency.

A Crypto Balanced on a Tightrope

French tightrope walker Phillippe Petit A sophisticated algorithm linked Terra with Luna. Luna was used to maintain Terra's stability, and Terra's stability was used to preserve Luna. The final fallback was $3 billion in Bitcoin reserves.

An accurate analogy was that Terra Luna was like a tightrope walker.

Теги agnimandur, near, cryptocurrency, codeforces

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en9 Английский Agnimandur 2022-06-03 08:02:25 0 (published)
en8 Английский Agnimandur 2022-06-03 07:55:01 0 (published)
en7 Английский Agnimandur 2022-06-03 07:54:01 63
en6 Английский Agnimandur 2022-06-03 07:52:05 90
en5 Английский Agnimandur 2022-06-03 07:50:46 147
en4 Английский Agnimandur 2022-06-03 07:48:12 20 Tiny change: '.\n\n#### A Crypto Balanced ' -> '.\n\n#### Terra Luna: A Cryptocurrency Balanced '
en3 Английский Agnimandur 2022-06-03 07:47:24 2360
en2 Английский Agnimandur 2022-06-03 07:21:05 2116
en1 Английский Agnimandur 2022-06-03 05:34:40 1854 Initial revision (saved to drafts)