The MakerDAO founder had warned that UST will go to zero because it is a solid Ponzi.
It is no longer news that TerraForm Labs ecosystem tokens, including TerraUSD (UST) and LUNA, suffered one of the most devastating dips since the inception of the cryptocurrency market.
With UST losing its peg to the U.S. dollar, LUNA followed the supposed stablecoin and crashed significantly, and investors of these tokens were massively affected by the dip.
While many cryptocurrency experts have warned about the imminent crash of Terra tokens, many investors failed to heed these warnings, as they ended up paying the price.
MakerDAO Founder Issued UST Warning In January
On January 4, 2022, Rune Christensen, the CEO, and founder of MakerDAO, warned investors that the UST stablecoin, as well as Magic Internet Money (MIM), are solid ponzis.
According to Christensen, despite the fact that people are making huge profits via their investments in UST and MIM, the digital currencies do not have the right resilience integrated into them.
He added that the lack of resilience in the tokens would expose the duo to unusual volatility that could see the price of the assets crash to zero.
“Look, UST and MIM are solid ponzis and I respect that. You can make good money off them for sure. But they are not built for resilience and they are going to 0 once the market turns for real Now stop trying to scam users looking for actual stability into being ur exit liquidity”
Look, UST and MIM are solid ponzis and I respect that. You can make good money off them for sure. But they are not built for resilience and they are going to 0 once the market turns for real
Now stop trying to scam users looking for actual stability into being ur exit liquidity
— Rune (@RuneKek) January 4, 2022
As expected, Do Kwon, the CEO, and co-founder of TerraForm Labs, came to the defense of his project, UST, and said some harsh words to Christiansen.
”I thought you were [dead] already,” Kwon said.
I thought you were ded already
— Do Kwon 🌕 (@stablekwon) January 4, 2022
It is worth noting that both MIM and UST have a common feature, which involves creating an opportunity for the crypto community to earn passive income by investing in the project.
UST Investors Warned Again
As reported last week, Kevin Zhou of Galois Capital, who warned people to avoid investing in Terra, noted that UST crashed due to the high ROI paid to Terra’s Anchor Yield program investors.
With investors earning nearly 20% for depositing their funds in the Anchor protocol, the Terra team was not able to pay interest as more people invested in the project, Zhou said.
Zhou, who also described the Terra system as a Ponzi, noted that investors were being siphoned by the Terra team.