Changpeng Zhao, CEO of Binance, the world’s largest cryptocurrency exchange expressed his disappointment in the way Terraform Labs handled the recent LUNA and UST collapse.
Zhao said that the team behind the Terra network hardly responded to Binance’s request to help them restore the network.
“We requested their team to restore the network, burn the extra minted LUNA, and recover the UST peg,” he tweeted. “So far, we have not gotten any positive response or much response at all”
5. I am very disappointed with how this UST/LUNA incident was handled (or not handled) by the Terra team. We requested their team to restore the network, burn the extra minted LUNA, and recover the UST peg. So far, we have not gotten any positive response, or much response at all
He compared Terraform’s response to that of Axie Infinity’s, the project that was hacked for $622 million in March 2021, lauding the latter for its accountability at that time.
“This is in sharp contrast to Axie Infinity, where the team took accountability, had a plan, and were communicating with us proactively” added Changpeng Zhao. “And we helped.”
On March 23, Ronin, an Ethereum sidechain developed for the Axie Infinity game was exploited.
Hackers were able to drain 173,600 ETH and 25.5 million USDC from the bridge, culminating in one of the industry’s largest-ever hacks with the total funds amounting to $622 million lost.
The Terra Collapse
Terra ecosystem is composed of a native token called LUNA and a native stablecoin called UST. UST is an algorithmic stablecoin governed by smart contracts, with LUNA acting as an arbitrage cushion to help UST maintain the dollar peg.
Users could swap $1 worth of LUNA for UST and vice versa. If the price of UST rises above the peg, people can swap $1 worth of LUNA for UST and sell the newly minted UST for a profit.
Since last week, however, the UST stablecoin depegged, hitting an all-time low of $0.15 today, according to data from CoinMarketCap. The sudden fall in the price of UST triggered an enormous arbitrage opportunity.
The opportunity created tremendous sell pressure for LUNA resulting in the coin losing 100% of its value in less than a week. LUNA currently trades at $0.000024, a massive drop from its all-time high of $119.18 recorded last month according to data from CoinMarketCap.
The falling Terra coins led to the temporary halting of the Terra blockchain. It has only recently been restarted.
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