How to make a $800M in crypto attacking the once-3rd-largest stablecoin

That 20% gains promised by Anchor were complete bollocks. Too much USD was promised, many users confused UST with USD. When UST lost its peg, the users woke up from their slumber / programming, and realized that they'll never get their 20% gains or their money back. Some woke up at $0.99, others woke up at $0.95, and many others woke up at $0.65 yesterday (or today).

The value continues to bounce between $0.65 and $0.90, but it doesn't seem like anyone has much confidence that UST will come back to $1.

So they started to sell off their UST, or at least, the people who can (the ones who were stuck in 20% accounts couldn't sell).

Because 20% APY gains are unsustainable, this entire event was inevitable. Once the dollar value promised by the system far exceeded the dollar value actually in the system, the whole thing collapsed.

---------

And now a $6 Billion market cap coin (LUNA, since so much of its value has been lost...) needs to somehow be sold to make the $15 Billion remaining in UST whole. This doesn't seem possible anymore. More and more people are realizing this, and they're selling at 80-cents, 70-cents, or 60-cents, because they look into the future of this whole structure collapsing to $0, and 60-cents is better than 0-cents in the long run.

Its quite possible that the original people who made all of this knew this house-of-cards from the beginning, and just wanted to take real world US-dollars from people in exchange for fake UST funny-money. But now that users are angry and asking questions, they need to create boogie men to deflect themselves from the blame.

-------------

As Mark Twain said: It’s Easier To Fool People Than To Convince Them That They’ve Been Fooled.

Let the fooling games continue.

Seems … unlikely

Somebody opened a $4.2Bn short position on BTC, and spent $1Bn buying UST, on the theory that them unwinding their $1Bn purchase would cause the backers of UST to sell $1Bn in BTC which would somehow result in massive profits on their $4.2Bn BTC short?

There is nothing stable about stablecoins - it works until it doesn’t.

I’ve been a lot closer to the people behind cryptocurrency and it has sharpened my eye in every other sector of business to see that the people that are out there doing the biggest things are often the ones with the weakest understanding of the problem they think they’ve solved. Money flows to them because there’s too much of it being created, and it has to go somewhere, until it crashes the whole system. Real conscientious long-term innovators get crowded out and then wrecked, while the ignorant and/or dishonest pull out with short-term fiat gains.

Ironically, this is why Bitcoin was created in the first place. It was a response to the systemic risk created by the nexus of the Federal Reserve, Wall Street, and Treasury: fixed-supply self-sovereign currency for a stable value and peaceful society. I have an email from 2009 to a friend that just discovered it, explaining why it was brilliantly elegant technology, but flawed by its speculative nature. There is a difference in the way people perceive information. I ignored it because I thought this flaw would be fatal to anyone that thought about it deeply enough. They saw opportunity, and mined over 200,000 BTC.

It turns out that human social systems require a bit of ignorance, irrationality, and greed. Ponderous people might do better by limiting the depths of their thought, but honestly it will never be as natural for them as it is for a hyper-enabled over-confident person with capacity for thought that roughly aligns with ignorant money handlers. There is a strong correlation between intelligence and wealth, but it only fits the middle. I think this is explained by career choice for salary employees, and conscientiousness to avoid wasteful spending and loss. I’m not sure where I fit on that spectrum, but my savings account grew until I realized that I was losing more in terms of future housing costs than I was gaining with salary, even with an extreme ascetic lifestyle. But what to invest in? Its all junk, really. I see no rational basis for the valuation of any company in the S&P, nor price of real estate. Some may exist, but I don’t have time to find them. Sooner or later, we all become ignorant money handlers ripe for exploitation.

I chose cryptocurrency because I was more okay with being exploited by a society at large than an oligopoly. Then the same things started happening in cryptocurrency, and I did the same things to try to avoid it. Regardless, the crypto-oligopoly, knighted by the kings of traditional finance, ended up pumping and dumping the whole system. Predictable, but still unavoidable. What are you going to do? Savings account? Corporate officer salaries? Shiny yellow stuff? Give up your salary to become a farmer?

So you have to invest in things you may know to be junk, and sometimes it works out, and sometimes you get wrecked. The one thing that is guaranteed to wreck you faster than anything else, is trading junk to junk at taxable profit. Portfolio strategy like rebalancing will kill you in both directions. Don’t buy unless you’ll never need the money, and don’t sell unless you do need the money. Paradox? Yes.

Meanwhile, I’m still amazed by the cryptography and decentralization, so I’ll be working on something that makes sense to me, and probably nobody will care.