As the LUNA-UST situation didn’t change much over the weekend, another big name in the crypto industry gave their thoughts on what just happened. Vitalik Buterin, the founder of Ethereum, and Binance’s CEO Changpeng Zhao (CZ) separately took to Twitter this weekend to critique Terra—and the very premise of the UST token itself. The CEO of crypto exchange FTX, Sam Bankman-Fried, also has a negative view of Terra.
Vitalik Buterin
Although known as a person who rarely participates in the discussion of “drama” in the crypto industry, but with the magnitude of damage and impact caused by LUNA-UST, Ethereum founder Vitalik Buterin also provides your personal thoughts.
On May 14, Anthony Sassano, the writer of the popular The Daily Gwei newsletter series in the Ethereum community, stated the following:
This statement refers directly to UST, as it is an algorithmic stablecoin backed by LUNA. In addition, yield farming, the activity of locking tokens to receive rewards, has also been criticized in recent times as “nothing more than a form of bribe for investors to not release coins” and brings no value to them. In addition to delaying the selling pressure of coins in the short term, the project will increase the total supply in the long term.
Below, Vitalik replied that he completely agrees with this opinion and emphasizes that algorithmic stablecoins and backed stablecoins are different.
UST isn’t backed by cash or assets like other leading stablecoins. Instead, an algorithm ties UST’s value to LUNA via a burning/minting mechanism designed to keep UST at $1. That mechanism collapsed last week, wiping out UST and LUNA and with them some $40 billion in value.
In addition, Vitalik Buterin also shared his personal opinion on the proposal to “revive Terra” by hard fork the blockchain back to the time UST was de-peg. He commented on an opinion that efforts to rebuild Terra should focus on retail investors holding less UST rather than “whales,” “sharks.”
“That’s wishful thinking” – CZ
Within hours, Changpeng Zhao, CEO of Binance, the world’s largest cryptocurrency exchange, said such a plan was dead-on-arrival.
Zhao, one to rarely comment on the operations of cryptocurrencies traded on his company’s platform, made an exception yesterday to tweet that “forking” LUNA, or splitting the blockchain to create a second version, “won’t work.”
“Forking does not give the new fork any value,” Zhao stated flatly. “That’s wishful thinking.”
The fundamental weakness of such an approach, according to Zhao, is Kwon’s failure to realize that “minting coins (printing money) does not create value, it just dilutes the existing coinholders.” He went even further, openly challenging Kwon and Terra’s management of the crisis caused by the collapse of UST and LUNA.
Sam Bankman-Fried
As usual, the CEO of FTX exchange Sam Bankman-Fried had a long series of tweets to share his feelings about LUNA-UST.
First, Sam Bankman-Fried cited an earlier prediction of his algorithmic stablecoin model, that it would not be able to be sustained during high market volatility because the collateral would depreciate severely.
Next, the CEO of FTX said that the market should not use the term stablecoin to refer to all the currencies pegged to USD on the market because there are many different types.
Certainly, those who have been in the crypto industry for a long time will be able to see the difference, but those who are new or lack knowledge will sometimes find it difficult to understand and confused, leading to making initial decisions that lack calculation.
Sam Bankman-Fried also said that all losing investments should not be called ponziers, because many mainstream stocks like Netflix (NFLX) or AMC in 2022 have all dropped more than 50%. It’s just an investment risk that all have to accept when putting their money in.
However, there were people who criticized the CEO of FTX for trying to “make excuses” for LUNA, because it is essentially a ponzi scheme. This person pointed out that the Anchor protocol offers 20% APY interest to entice participants, while it is impossible to maintain it for long.
In general, influential figures in the crypto world still have a not very optimistic view of Terra’s future. However, they still believe in the development method of a blockchain and take this as a lesson to make decisions regarding the direction of their platform.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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