Terra Luna had 80,000 BTC in reserves.
When UST lost its peg, they tried to defend it by issuing massive amounts of LUNA and selling all the BTC.
They burned practically the entire reserve to keep something that was no longer supportable.
I understand that Michael Saylor learned from this. He knows you shouldn’t burn the reserves to defend an artificial peg like STRC.
You have to let the market determine the price and simply keep the promise (at an APR of 11.5%).
Alternative scenario:
If Terra hadn’t issued LUNA to defend the peg and hadn’t sold the 80,000 BTC at ~30,000 dollars:
- UST would have collapsed anyway → The market would have found its real price.
- LUNA would have dropped significantly, yes, but temporarily. Without the hyperinflation of trillions of new tokens that were printed to defend the peg, it wouldn’t have gone to zero.
They would still have had the 80,000 BTC, which went from $30k to $126k dollars at the last ATH → That would have given them approximately more than $10 billion in reserves.
With a combined market cap of LUNA + UST that nearly reached $50 billion at its peak, keeping that Bitcoin reserve would have been an enormous pool of capital to rebuild from the ashes.
LUNA would have let the market fight it out on the price until the storm passed. Then, with the reserves intact, they could have rewarded holders, created a new reserve-backed stablecoin, or simply rebuilt the ecosystem.
Terra Luna had one of the large ecosystems that wouldn’t stop innovating; back in 2020 it had been experimenting with strong growth in synthetic versions of real-world tokenized stocks.
Regardless of all this theory, still YES, a lot of people would have lost money.
But many others would have recovered.
Terra’s story could have been very different.
When UST lost its peg, they tried to defend it by issuing massive amounts of LUNA and selling all the BTC.
They burned practically the entire reserve to keep something that was no longer supportable.
I understand that Michael Saylor learned from this. He knows you shouldn’t burn the reserves to defend an artificial peg like STRC.
You have to let the market determine the price and simply keep the promise (at an APR of 11.5%).
Alternative scenario:
If Terra hadn’t issued LUNA to defend the peg and hadn’t sold the 80,000 BTC at ~30,000 dollars:
- UST would have collapsed anyway → The market would have found its real price.
- LUNA would have dropped significantly, yes, but temporarily. Without the hyperinflation of trillions of new tokens that were printed to defend the peg, it wouldn’t have gone to zero.
They would still have had the 80,000 BTC, which went from $30k to $126k dollars at the last ATH → That would have given them approximately more than $10 billion in reserves.
With a combined market cap of LUNA + UST that nearly reached $50 billion at its peak, keeping that Bitcoin reserve would have been an enormous pool of capital to rebuild from the ashes.
LUNA would have let the market fight it out on the price until the storm passed. Then, with the reserves intact, they could have rewarded holders, created a new reserve-backed stablecoin, or simply rebuilt the ecosystem.
Terra Luna had one of the large ecosystems that wouldn’t stop innovating; back in 2020 it had been experimenting with strong growth in synthetic versions of real-world tokenized stocks.
Regardless of all this theory, still YES, a lot of people would have lost money.
But many others would have recovered.
Terra’s story could have been very different.