Main navigation

Binance CEO: Luna and UST "Was Just Stupid"

Sun, 05/22/2022 - 15:20
article image
Arman Shirinyan
Binance CEO thinks that those who designed TerraUST should have their heads checked
Binance CEO: Luna and UST "Was Just Stupid"
Cover image via
Read U.TODAY on
Google News

According to the most recent AMA-session on Reddit, Binance's CEO Changpeng Zhao expressed his thoughts and opinions on the whole Terra Luna and UST situation, describing it as "stupid" and believing it was not a scam.

Prior to the AMA session, CZ published an article, breaking down the whole situation, especially after receiving a deserved heaping of criticism coming from users who used Binance's UST staking offering on the platform.

Elon Musk Hits Back at Dogecoin Co-Founder Who Called Him “Self-Absorbed Grifter"

The major flaw, according to CZ, was the mechanism that implied that minting more UST would somehow increase its total value. The mechanism criticized by CZ was the core of the whole Terra/Luna ecosystem, which allowed for keeping the peg of UST up.

Do Kwon previously faced the same criticism, which is why his foundation decided to start staking additional funds for backing up the stablecoin in case of increased volatility and lack of liquidity on platforms like Anchor.

But due to a flawed pegging mechanism and problematic "backing with volatile assets" idea, UST could not hold up its peg and tumbled against the increased selling pressure and lack of exit liquidity. Reportedly, LFG even failed to immediately back its stablecoin with BTC holdings as market makers were not able to provide enough liquidity right away.

“Pharma Bro” Martin Shkreli Is Bullish on Solana, Ethereum and Algorand

Jokingly, CZ added that anyone who designed the whole UST-backing mechanism should have their "head checked," referring to initial problems with the ecosystem's design.

At press time, Terra's UST and LUNA are still moving at extreme lows, showing some gains and losses during the day. For example, LUNA token is facing a 65% increase in recent hours, while UST is at a 5% loss.

article image
About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.