Experts predicted the collapse of Terra (LUNA) 4 years ago

Ethereum (ETH) cryptocurrency developer Mariano Conti, who previously held the position of head of the intelligent contract research department at MakerDAO, recalled that back in 2018, experts predicted the collapse of Terra (LUNA). He noted that experts discussed the design flaws of the cryptocurrency in April 2018 and were highly far-sighted.

The so-called “Death Spiral” Terra (LUNA) was predicted 4 years ago. A particular programmer Cyrus Younessi from MakerDAO criticized the Terra (LUNA) architecture and its stablecoin TerraUSD (UST) in one of the social networks. Then he announced that the project was bound to collapse and was perplexed; almost the startup founders did not understand this.

Younessi also recalled the tragedy of NuBits (USNBT), a stablecoin backed by dubious algorithms, whose value collapsed in the second quarter of 2016.

He was supported by the former director of the Coinbase exchange, Linda Xie, who also criticized the mechanism for supporting UST exclusively with the LUNA token. According to the expert, such an algorithm is too fragile. Any panic in the market on the part of investors will quickly launch “death spirals” – a scenario when two cryptocurrencies – a stablecoin and its base token – will tend to a price equal to zero.

Analysts noted that such a scenario occurred a few months ago. Investors panicked and the depreciation of one virtual asset led to the collapse of the second.