a smaple: someone buy a ust as its price 0,5dollar
then he forge it to 1dollar luna
sell luna
so he get 1dollar
and the luna price down, ust pirce down with luna
he buy a ust 0.4 dollar
forge it to luna,
sell it
so he can use this to get lots of money
This is how the arbitrage exchange mechanism is supposed to work. It relies on the notion that luna has inherent value because it’s the core token of the blockchain. But when there is no confidence in the project, it’s worthless. Same with all cryptocurrency.
Why not introduce a fuse mechanism?
Will UST still be trading after Luna2 open?
What do you do with UST after hard folk?
Arbitraging is part of the whole mechanism of Terra chain and helps keep it in balance and restore peg. A big part of the whole thing is users incentived to do so because it makes them profit. Of at a loss no one would do it. Edit: Over time/done enough the price levels out and arb opportunity gone until next time. A couple Terra chain dApps/protocols built around this idea to let regular folks easily participate White Whale and Kujira (need a Terra chain wallet like Terra Station or xDEFI to interact with).