Proposal for the 1.2% Tax Parameter Change

tolben · September 28, 2022, 7:36am

Peg can be done. Code works, but TFL did really wrong steps. The problem is Anchor.

terra-rebels/postmortems/blob/main/06192022-UST-Attack-Postmortem.md

# Fall of Terra – Timeline of UST "de-peg" attack

## Summary

The following postmortum outlines the key events leading up to the "de-pegging" of UST and the subsequent crash of its native currency LUNA. It is meant to provide clarity on the state of the Terra Classic ecosystem as a whole and seperate fact from fiction while the Terra Rebels organization work to repair the damages caused by the stewardship of TFL & LFG, who have clearly decided to give up all hope of salvaging the mess they created and put their efforts into wiping the slate clean via rebooting the ecosystem on Terra v2.


## Timeline

| Time | Event |
| --- | --- |
| 2021-11-25 | A twitter account by the name of Freddie Raynolds outlined a way to attack the existing model of the UST with a capital of $1B. [Reference link](https://twitter.com/FreddieRaynolds/status/1463960623402913797) | 
| 2021-12-?? | Terra aggressively syndicates a deal led by "Jump Crypto, Binance Labs," and others to invest $1B at into the Luna Foundation Guard at a staggered investor unlock of 25% each year. Binance never participated. Previous iterations of the deal included "Tiger Global," who also never participated, as the deal lead. |
| 2021-12-13 | The Anchor Protocol, which had been cashflow-positive for almost all of 2021, becomes cashflow-negative as its deposit popularity outpaces the popularity of its borrowing. It would never regain cashflow positivity. [Reference link](https://grafana.luigi311.com/d/7j96rRI7z/anchor?orgId=2&from=now-1y&to=now) |
| 2021-12-27 | Crypto blogger "Recovering TradFi Chad" posts a lengthy speculative critique of the Degenbox, Anchor's deteriorating solvency, and the institutional investor private placement, arguing that Anchor is being run in the ground to artificially inflate LUNA's price and lock liquidity into the Astroport DEX which was about to launch at the time. [Reference link](https://recoveringtradfichad.substack.com/p/the-great-luna-pump-a-kwon-sestagalli) |
| 2022-02-17 | Do Kwon injects $450M into the Anchor Protocol to keep Anchor's 20% yield operational. [Reference Link](https://forecrypto.net/terra-injects-450m-ust-into-anchor-reserve-days-before-protocol-depletion-2/) |
| 2022-03-?? | Anchor's Reserve rapidly deteriorates as deposit inflows accelerate. On the Anchor governance forums, ParaFi, Arca, Polychain and others propose various methods of reducing Anchor's yield. [Reference Link](https://dirtroads.substack.com/p/-34-anchor-protocol-too-big-to-thrive) Terra devs heap unanimous scorn on the Arca and Parafi proposals on Twitter. Ultimately Anchor settles on a 6 month roadmap to reduce the yield to ~12%, vs cashflow breakeven of ~6%.|
| 2022-04-13 | Luna Foundation Guard acquires more BTC. [Reference link](https://news.coincu.com/80549-luna-foundation-buys-2500-bitcoin-during-40k/) | 
| 2022-05-01 | The Terra idle capital ratio, defined as (Anchor deposits - Anchor loans) / (Terra TVL), which stayed at 10% or less through January 2022, has ballooned to 35% of Terra TVL: 35% of total Terra TVL ($12B) is now overnight liquidity doing nothing but farming the Anchor yield, able to vanish at the first sign of trouble. |
| 2022-05-06 | Luna Foundation Guard acquires more BTC in OTC trading with Genesis Trading & 3AC. [Reference link](https://news.coincu.com/86477-luna-has-acquired-37863-bitcoins/) |

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