Ethereum Founder: “Tera UST Stop Ponzi Scams Immediately”

Vitalik Buterin speaks at the ‘Conversation Discussion with Ethereum Founder Vitalik Buterin’ held under the theme of ‘Blockchain and the Future Economy’ at the National Assembly Hall in Yeouido, Seoul in 2019. News 1

Vitalik Buterin, who developed the second-largest cryptocurrency (virtual currency) Ethereum by market capitalization, called it a “Ponzi scam” in the TeraUSD (UST) and Luna crashes and demanded that the experiment be stopped immediately, while more common than whales (large investors). He insisted that the investor’s losses should be compensated first.

Buterin expressed his strong support for the opinion that the Ponzi scam and the experimentation of algorithm-based stablecoins (cryptocurrencies with a fixed price) should be stopped after the crash.

Buterin further criticized the term ‘algorithmic stablecoin’ as an exaggerated propaganda term.

Buterin criticized Terra’s Ponzi scam, saying, “The 20% interest rate is stupid.”

Buterin also stressed the need to bail out small investors before the whales that lost money from the UST and Luna crashes.

Do-hyeong Kwon, CEO of Terraform Labs, who caused the Terra scandal, issued the stablecoin UST and the sister coin Luna.

Stablecoins are usually pegged one-to-one with a government-issued currency such as the dollar. However, unlike traditional stablecoins, UST employs a different algorithm.

Other stablecoin issuers hold dollar bonds and bills as reserve assets to maintain a one-to-one dollar peg.

However, Terra supported its value with a cryptocurrency called ‘Luna’. When the price of Terra falls, investors can deposit Terra with Terraform Labs and earn up to 20% in arbitrage in exchange for $1 worth of Luna.

This way, when the price of Terra goes down, it reduces circulation and raises the price again to bring its value to $1.

Terra bought about $3.5 billion worth of Bitcoin to maintain the value of UST and Luna. holding Bitcoin as a reserve.

However, the Terra run (terra avoidance phenomenon) occurred due to doubts about the UST, and when the price plummeted, Terra sold a large amount of Bitcoin to maintain the value of UST, causing a plunge in the entire cryptocurrency market.

(Seoul = News 1)

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