Recently, the largest "black swan" in history has been exposed in the currency circle.The market value of LUNA coins, which used to be as high as 41 billion US dollars and had hundreds of thousands of fans, plummeted one after another. In just a few days, the price dropped from nearly 90 US dollars to today's 0.00017 US dollars, almost zero, tens of billions The market value of the U.S. dollar evaporated instantly.
When it comes to LUNA coins, UST coins are inseparable.UST Coin is an algorithmic stable coin founded by a Korean and developed by Terraform Labs."The goal of UST currency is to ensure that the price is 1:1 linked to the US dollar." Yu Jianing, executive director of the Metaverse Industry Committee of China Mobile Communications Federation, said that in order to maintain this value anchor, Terraform uses its public chain token LUNA as UST The de facto collateral behind the coin, hoping to provide value support for the UST coin, 1 UST coin is equal to LUNA coin worth 1 USD, that is to say, if the LUNA coin price is 1 USD, it can be exchanged for 1 UST coin, if LUNA coin If the price rises to $10, you can exchange for 10 UST coins.And the relationship between the two is "two-way destruction and minting". Whenever 1 UST coin is minted, LUNA coins worth 1 USD must be destroyed.
During this process, how can the price of UST remain stable?Zhao Wei, a senior researcher at OKX Research Institute, a well-known digital platform, introduced that the system adjusts the price of UST coins through an arbitrage mechanism to keep stable coins anchored: when the price of UST coins is higher than $1, investors can buy and destroy LUNA coins. Minting 1 USD of UST coins and then exchanging UST coins for U.S. dollars will increase the supply of UST coins and push their prices to fall back to 1 USD; when the price of UST coins is lower than 1 USD, investors can buy and destroy UST coins , in exchange for $1 worth of LUNA coins, a move that will reduce the supply of UST coins and boost their prices.In theory, the market will spontaneously carry out arbitrage through the above two operations, which objectively helps maintain the anchoring relationship between UST and the US dollar.
In order to attract investors to hold UST coins, Terraform also launched AnchorProtocol (anchoring protocol), which allows users to deposit UST coins and receive an annualized interest rate of up to nearly 20%.Under the temptation of high yield, LUNA coin is sought after by many investors, and its price will rise rapidly in 2021, from less than $1 to a maximum of $119.5, with a market value of $41 billion, which is known as "currency circle Maotai".
But in the seemingly stable mechanism, there are actually huge risks hidden."Algorithmic stablecoins have no collateral assets, nor any value support. They just adjust the supply of stablecoins to maintain the price of the currency anchored around a certain value, and have weak resistance to price fluctuations caused by speculative behavior." Yu Carrian said that from the historical attempts of several algorithmic stablecoins, the deviation from the anchor price is more than 50%, and instability is its normal state.
How did the LUNA coin crash happen?Yu Jianing drew a clear path for reporters: the sharp correction in the virtual currency market caused the price of LUNA coin to drop and the market value to drop sharply; the sale of UST coins by giant whales caused market panic, causing UST coins to de-anchor for a long time; the market began to sell UST coins in large quantities and More LUNA coins were minted, the supply increased, and the price of LUNA coins fell further; the decline of LUNA coins made the cycle go back to the beginning, and so on... "After a serious de-anchoring occurred, because UST coins could not quickly return to 1 USD, the ecology itself The mechanism caused malicious inflation of LUNA coins, triggering a 'death spiral'."
Under the slump, many investors suffered heavy losses.Changpeng Zhao, founder of the well-known digital trading platform Binance, also recently stated on social media that due to the collapse of LUNA coins, he has returned to poverty overnight, and the value of LUNA coins held by Binance has dropped from $1.6 billion a month ago to about $2,200. .
"LUNA coin was born in South Korea and has a great influence locally. According to estimates, more than 200,000 South Koreans suffered losses." Zhao Wei said that this incident shows that although the current market value and volume of virtual currency have a certain scale , but it is still a high-risk product in nature, and investors must not blindly enter the market.
The currency circle, which is already in a downward cycle, has also suffered from this.Just after the LUNA coin plummeted, the virtual currency collectively "dive", and Bitcoin once fell below $27,000, setting a new low for the year."The plummet of LUNA coin is an important test for the subsequent development of stablecoins and the entire virtual currency market, as well as for investors' confidence, and there will be more chain reactions in the future." Yu Jianing said.
There is also a view that in the long run, as the virtual currency and the real economy are increasingly connected, its impact will also spread to the real economy.At present, many international companies, such as Tesla, have held a large amount of virtual currency assets. With the sharp rise and fall of virtual currency prices, the stock prices of these companies will also fluctuate greatly, posing potential risks that threaten financial security and social stability.
International organizations, central banks and regulators in many countries have begun to rethink the regulation of stablecoins.Alderley, chairman of the International Organization of Securities Regulatory Commission, said recently that a joint agency responsible for coordinating global virtual currency regulation is urgently needed, and it may be realized within next year.The Korean Financial Services Commission recently requested that exchanges strengthen the inspection of stablecoins to prevent the LUNA coin incident from happening again.
In recent years, my country has been cracking down on virtual currency trading speculation, and a large number of trading platforms and "mines" have been shut down or relocated overseas, effectively blocking the transmission of this risk in China and avoiding investors' investment risks to the greatest extent possible.
"In the future, our country will also speed up the completion of regulatory shortcomings, and introduce targeted regulatory measures for the risk of stablecoins to further reduce the space for virtual currency speculation, illegal financial activities and related illegal and criminal activities, and better protect the property safety of the people. "Zhou Maohua, a macro researcher at the Financial Market Department of China Everbright Bank, believes that due to the differences in the regulatory policies of various countries on virtual currency, it is easy to make virtual currency a channel for cross-border illegal transfer of assets. Next, regulators in various countries should strive to formulate global general rules and strengthen cross-border Supervision to prevent virtual currency from becoming a tool for money laundering, fraud, and illegal fundraising.
