Why UST won’t be unanchored like USDN: too big to fail

星球君的朋友们

Odaily资深作者

2022-04-07 17:01 (UTC+8)

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The old king of Defi is about to transfer more benefits to the new king.

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The old king of Defi is about to transfer more benefits to the new king.

The author of this article, forgiven, was originally published inTwitter, edited with permission

A friend came to ask me about whether UST would be unanchored like USDN (Waves stablecoin), and Luna plummeted. Today, extensive discussions were held in the community again, but no consensus was reached. I record some collisions of thinking for your reference. Personal tendency: UST is going farther and farther on the road of being too big to fail. If UST fails, it will be the failure of crypto itself.

Recently, the Luna Foundation hoarded BTC to endorse the UST supported by Luna. The action code is lfg (let's fucking go). Whenever there is a change in the BTC address, it will send a news booster. The circulation of 16.73 billion is still a far cry. Where does the money to buy BTC come from? In addition to financing, the funds are mainly the team burning LUNA -> UST -> USD -> BTC. But the counterparty, what is the purpose of exchanging real dollars for air dollars?

This is about the UST mining scene created by Do Kwon, allowing you to exchange for real dollars obediently:

1. Anchor loan, locked $12.4 billion ust, annualized 20%. (Achilles' heel, printing 2.5 billion interest a year);

2. Curve,UST- 3.Crv pool, $1.3 billion pool;

3. Astro $600 million pool, Osmo $500 million pool;

4. Others are scattered in major centralized exchanges, with a single-day UST trading volume of about 1 billion US dollars. Second only to usdt, usdc, busd.

The core of UST not being unanchored comes from the fact that the marginal transaction price is not less than $1. After deducting the locked UST, there are only 3 billion USTs circulating outside, and the single-day trading volume is 1 billion, which is 1/3 of the turnover rate. More than enough to break anchor. Even if giant whales like SBF, Shenyu or Sun Yuchen start to withdraw, Curve's pool can support a single transaction of nearly 500 million US dollars. The latest unanchoring of UST occurred briefly when Sam withdrew $500 million from the Curve MIM pool at the end of January.

Back to Achilles' heel, Anchor 20% annualized? Assuming that the interest rate will gradually decrease in the future, some depositors will withdraw, exchange UST for real US dollars, and turn to Luna to smash the market. But this can be a process of decentralization and gradual change. In the end, the UST circulation will collapse and the price of Luna will fall, rather than an instant collapse. It is more likely that the unanchoring unfolded because the founder Do Kwon was arrested, and Cex’s UST was taken off the shelves at the same time due to regulatory pressure, and it was really over.

This proposal actually touches the most fundamental risk governance framework of Curve. Curve's original framework is that 3crv can be considered risk-free, and stablecoins with the same algorithm as the air go to 3crv to fool around, and the rewards for vecrv are also 3crvlp. The Luna team wanted to switch positions and let 4pool replace 3 pool. Once this plan is passed, the status of Dai will decline, while Frax and UST will skyrocket and become hard currency. That is to say, in addition to BTC, they also forcibly kidnapped Curve and got into the car together.