Nansen published a comprehensive analysis of the circumstances that led to Terra’s demise. Different parties were involved in a sell-off that resulted in TerraUSD’s tragic end, according to the blockchain analytics business.
Nansen also mentioned the involvement of the DeFi lending platform, the Celsius Network, as one of the parties that eventually led to the crash.
- “We refute the popular narrative of one ‘attacker’ or ‘hacker’ working to destabilize UST.”
Few people had already recognized significant weaknesses in UST, according to Nansen’s analysis, and had triggered the fall with a few crucial actions. TerraUSD, unlike other stablecoins, relied on its sister coin, LUNA, to keep its peg.
The collapse of the Terra ecosystem rocked the crypto world, with investors losing their life savings and the crypto market losing over $40 billion.
- “The de-peg of UST could…have resulted from the investment decisions of several well-funded entities, e.g. to abide by risk-management constraints or alternatively to reduce UST allocations deposited into Anchor in the context of turbulent macroeconomic and turbulent conditions.“
Many users even abused the arbitrage options prompted by price volatility on Curve and Coinbase, according to Nansen’s report. The Luna Foundation Guard withdrew $150 million from Curve Finance to keep the sinking peg. In response to the withdrawal, a group of customers pooled $105 million. Until May 8, 2022, the full withdrawal and deposit process was repeated indefinitely.
Two of the wallets that withdrew $420 million from Anchor were identified by Nansen as belonging to Celsius. Celsius was also involved in converting the cash to Ethereum via the Wormhole Bridge, according to the statement.
