The multibillion-dollar collapse of Terraform Labs’ stablecoin and the LUNA token is still reverberating through the cryptocurrency industry, and emerging from the wreckage of lost investments and broken blockchain ideas are many questions for Terra’s South Korean founder, Kwon Do-hyung.
Over a matter of days last week, the company’s UST stablecoin started to slip from a peg to the U.S. dollar, before losing its grip entirely and crashing to just cents on the dollar. The sister LUNA cryptocurrency followed to become effectively worthless, with the combined collapse evaporating an estimated market capitalization of US$37 billion, according to CoinGecko.
Future MBA students may run test-study autopsies of the Terra downfall and what exactly happened — Ponzi scheme? Bad timing? Stablecoins based on code can’t work? Attack by short-sellers? Or simply brought to earth by the vagaries of inflation and a bear market?
Park Sun-young, professor of economics at Seoul’s Dongguk University, has an even simpler theory: “I believe overconfidence brought the downfall.”
One question for Terra’s billionaire founder and Stanford University computer science graduate, better known as Do Kwon, is why he shut down the company’s South Korean offices days before the Terra universe cratered? Was it knowledge of impending doom or just an earlier planned restructuring?
“Although I cannot confirm the situation, I think it is unlikely that Terraform Labs expected the…