The sudden dissolution of TerraUSD (UST), the largest algorithmic stablecoin, has shocked the cryptocurrency market. When the UST fell well below the $1 peg, there was downward pressure on bitcoin and the cryptocurrency market as a whole. Its sister cryptocurrency, Luna, has also practically halved in value. So what happened to UST?
What happened to UST?
Nansen, a cryptocurrency forensics firm, has identified four steps towards decoupling the TerrsUSD (UST) stablecoin from the US dollar. According to Nansen's full report, published May 27, 2022, the hypothesis that the UST is being attacked by a single powerful entity, widely discussed on Crypto Twitter, is nonsense.
Instead, seven major wallets (qualified traders, “token millionaires”, etc.) explored the imbalanced position of the UST Tokennomics LUNA design. They likely started migrating his UST liquidity from the Anchor Protocol (ANC) on May 7, 2022. The protocol offered up to 19.5% APY on UST stablecoins before the Terra (LUNA) crisis.
Using the Wormhole Bridge infrastructure, it began to actively move liquidity from the Terra (LUNA) blockchain to Ethereum (ETH).
Nansen has revealed the address of seven whale-powered wallets that are essential for trading. They were labeled as "token millionaires" and "heavy DEX traders" using Nansen's algorithm. Eventually, the aforementioned account in Curve Finance (CRV) liquidity pool started trading UST against other stablecoins.
Due to “inefficiencies” between various price sources, after UST was de-pegged, significant arbitrage opportunities arose.
As a result of recent occurrences, the answer to the question "What happened to UST? " is, the UST stablecoin and Terra (LUNA) assets have both plunged to near-zero prices.
