Nansen Report shows that UST lost its peg due to the work of multiple large entities |

The Nansen Report on the State of Global Trade and Analysis: The Role of Large Traders highlights how large entities have destabilized the U.S. dollar’s status as a global reserve currency, causing its value to decrease significantly due to their work within financial markets

The “stablecoin price” is an interesting concept, but it has not been able to gain traction due to the work of multiple large entities. The Nansen Report shows that UST lost its peg due to the work of multiple large entities.

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Two occurrences upset the crypto community: TerraUSD (UST) losing its $1 peg and plunging to TerraUSD (UST) losing its $1 peg and falling to $0.03 and the crash of Terra (LUNA) to $0.0001372 were two events that shook the crypto community..03, and Terra (LUNA) collapsing to TerraUSD (UST) losing its $1 peg and falling to $0.03 and the crash of Terra (LUNA) to $0.0001372 were two events that shook the crypto community..0001372.

UST (now renamed as USTC or TerraClassic USD) is an algorithmic stablecoin backed by the collateral token Terra (now rebranded as Terra Classic or LUNC).

Because of their low volatility, stablecoins are considered as a safe haven for crypto assets, enabling their value to remain relatively near to a dollar whatever market circumstances, increasing their appeal and influence.

Nansen Report shows that UST lost its peg due to the work of multiple large entities |TerraUSD (now TerraClassicUSD) has lost its $1 peg and is now worth a few cents, while Terra (now Terra Classic) is currently worth less than a penny — photos courtesy of coinmarketcap.

Nansen, a blockchain analytics tool, went into the on-chain data to find what may have led the stablecoin to lose its peg due to the significant effect of UST losing its peg and the collapse of LUNA. Its findings suggest that the collapse was caused by a number of factors.

According to the Nansen analysis, a tiny number of addresses took advantage of the Terra ecosystem’s flaws. Due to the low liquidity of the Curve (CRV) pools that underlie the TerraUSD (UST) peg, these individuals took advantage of arbitrage possibilities.

Nansen’s results disproved the hypothesis that UST was destabilized by a single hacker or attacker. Instead, Nansen pinpointed seven addresses as being engaged in UST’s depreciation, with several of them being major players with significant token holdings.

Nansen Report shows that UST lost its peg due to the work of multiple large entities |Seven addresses have been identified as being involved in the UST peg loss, with some of them being significant token holders.

According to the study, the wallets used the Wormhole infrastructure to withdraw UST from Terra’s Anchor protocol. Getting the monies from the Terra network and onto the Ethereum blockchain. Wormhole is a bridge technology that enables users to move money from one blockchain to another, in case you didn’t know.

The UST was then swapped for a number of stablecoins held in Curve’s liquidity pools in large amounts. As a consequence, Nansen theorized that some of the found wallets took advantage of price discrepancies on Curve and decentralized and centralized exchanges by buying and selling between them during the collapse of UST.

Nansen Report shows that UST lost its peg due to the work of multiple large entities |Top wallets that have moved USDC to centralized exchanges + early Curve swappers – graphic from nansen.ai

Nansen’s blockchain study examined data from May 7 to 11—the time when UST lost its $1 peg—to uncover crucial transaction traffic statistics. Nansen narrowed the era by looking at social media and forum discussions, detecting significant transaction activity on Curve liquidity pools, which led to its three-phase analytical technique.

To begin, Nansen looked at transactions going in and out of the Curve lending protocol to create a list of wallets with behavior that indicated they had a significant impact on the UST crash.

Nansen Report shows that UST lost its peg due to the work of multiple large entities |Wallets are said to have had a significant influence on the de-peg of the US dollar — picture courtesy of nansen.ai

However, Nansen’s observations of transactions taking place over the Wormhole bridge made things more difficult during phase two. Only a few wallets were identified to be utilizing the Anchor protocol to send out their UST. Nansen then investigated the selling of UST and USD Coin (USDC) on controlled exchanges.

Nansen Report shows that UST lost its peg due to the work of multiple large entities |The total net UST transfers to centralized exchanges were investigated — picture courtesy of nansen.ai.

Finally, on-chain data was used to piece together a story about what happened when the UST stablecoin lost its peg. Then, a list of seven wallets that are thought to have played a key part in the Terra ecosystem’s demise was published.

The Nansen study includes some surprising findings derived from blockchain analytics. One thing is certain: Nansen has opted not to comment on what could be going on behind the seven key addresses implicated in the UST’s stablecoin’s demise.

The results of this paper serve to provide a clearer picture of what led to UST losing its pegs and the subsequent collapse of the UST and LUNA coins.

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