Sunday, January 29, 2023

Avalanche Founder Compared Terra’s Collapse To Mt. Gox

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Emin Gun Sirer, the Avalanche founder compared the fall of the UST stablecoin and Terra’s system to the hack of Mt.Gox which became one of the hottest crypto stores this year so let’s read more today in our latest cryptocurrency news.

Speaking on the matter of Luna and Terra was Emin Gun Sirer, the Avalanche founder. He noted how TErra’s previous growth affected other blockchains and that the collapse meant for the AVAX ecosystem and the rest of the crypto community. In an interview with Forbes, Sirer revealed his thoughts on the huge growth of the Terra system in the past year and the recent UST – LUNA collapse. The Terra situation is highly regrettable especially since Terra started out before Avalanche and it surged. It ended up attracting a lot of the money and a lot of the growth of the space which could have possibly gone to Solana or AvaX or some other high-speed chains.

He explained that at some point, the projects like Avalanche were being choked by LUNA’s fast growth and this turned most other chains to copy developments on Terra but his team steered clear from undertaking these kinds of activities. He added:

“We were smart enough to notice that we couldn’t do this. There are many reasons why not, but running a stablecoin of that kind with those kinds of feedback loops, it takes an enormous team with operational ability to try to keep that peg. We knew that we didn’t have that ability.”

emin gun sirer
Emin Gun Sirer, Source: Twitter

Sirer assured that there are no US-based teams that can deliver the regulatory structure for these initiatives. Terra’s growth should not be ignored however because Avalanche did partner with them via a token swap. Sirer pointed out that they swapped some $60 million worth of AVAX for LUNA and UST tokens in a bid to form the partnership with terra which could turn out to be a losing bet. The founder shared that all of the LUNA tokens went to zero but they were able to redeem a chunk of the UST for dollars. Despite all of the above, he said that he didn’t cause any economic challenges for their platform because the sum was not as significant.

On the other side, he shared that they’ve been in talks with the team from Terra and AVAX and that they swapped coins that were not dumped but that they were held with a low chance of selling them going forward. Avalanche’s founder compared the fall of UST and LUNA to one of the biggest hacks in the history of crypto which was the hack of the Mt. Gox exchange:

“I would compare it to Mt. Gox. I think the Mt. Gox crash was far more significant, it affects more coins, and more people. Now, we as an industry ended up learning a valuable lesson about algorithmic stablecoins. What I fear, though, is that this kind of event invites in regulators. “

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