CZ’s FAQ 8 - On LUNA/UST and Taking the Right Risks | Binance Blog

.@cz_binance has written a new article about $LUNA & $UST. He shares his views on the situation and reflects on the lessons, spillover effects, systematic risks & more👇

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5/20/2022 5:00:00 PM

.cz_binance has written a new article about $LUNA & $UST. He shares his views on the situation and reflects on the lessons, spillover effects, systematic risks & more👇

In the past week, it’s been difficult to escape the UST/LUNA crash. In fact, every interview I participated in revolved to some extent around the situation. To clarify my thoughts on the topic, I’ve collected my answers together, including my views, lessons learned, spillover effects, systematic risks, resilience, regulations, and more.

I voiced my opinions about the incident openly onLet’s take a look at the design flaws. Theoretically speaking, when you peg to one asset using a different asset as collateral, there will always be a chance for under collateralization or depegging. Even if it is over collateralized by 10x, the collateral asset can crash more than 10x. Nothing is 100% stable (relative to something else) in this world.

Printing money does not create value; it just dilutes existing holders. Exponentially minting LUNA made the problem a lot worse. Whoever designed this should have their head checked.However, in this case, the “income” concept is confused as the project team probably included their own token sales or appreciation in the value of LUNA as “income”. This approach is flawed. People come in because of the incentives, yes, and the valuation of LUNA goes up. And more incentives are given out to more people. But you haven’t created any value yet.

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cz_binance When something is too good to be true, it ain’t. Dun be greedy. Too greedy in this case. 20% return 😂 cz_binance You are the active owner 🧐 cz_binance Siz insanların kanını emen bir parazit gibisiniz piyasayı elinizde tutuyorsunuz istediğiniz gibi yönlendiriyorsunuz !! Ama genele bakıyorsun kripto dünyası hiç bir yere bağlı değil algısı yaratılıyor hepsi yalan hırsızlar konseyi kurulmuş haramiler oturduğu yerden zenginlesiyor!

cz_binance the image also belongs to the binance exchange, so I ask how 4 zeros are destroyed overnight? Don't make fun of people! !!!!!! cz_binance MMirabiun cz_binance APE NFT BINANCE LISTING VERY SOON . Go on make money by now APENFT cz_binance Take a look at singularitynet cz_binance People have been scammed stablekwon cz_binance 🤝😡

cz_binance I'm not Luna's holder, but I think Luna should be saved, saving Luna means saving a lot of people. Vice versa. Save Luna🔥🚀 Save Luna🔥🚀

LUNA Meltdown Doomed To Get Worse After Shocking Departure Of Terraform Labs Legal TeamTheir departure follows last week’s unrecoverable downfall of the TerraUSD (UST) stablecoin and native token LUNA.

cz_binance Thanks cz. You always support your community. Great leader of crypto industry ❤️😍 cz_binance 'While Terra did have an ecosystem with some use cases, the speed of growth of the ecosystem did not match the speed of the incentives used to attract new users. The growth was “hollow”. Eventually, the bubble burst, and here we are. ' 👍👍

cz_binance While all of that is true, but why did Binance also offer 20% staking on UST? At least Binance should check the 'design flaws' before accepting that, correct? cz_binance I would never enter the crypto exchange without Luna being rescued cz_binance Great article. Worth reading cz_binance IF LUNA NOT GO TO THE MOON, SHOULD WE BLOCKED BINANCE IN ALL COUNTRY

cz_binance cz_binance and VitalikButerin Should both write a paper on Steam_Exchange. Consider this an invite. Weigh in what this team is developing and how they are doing it. cz_binance cz needs to pay for USTs locked in binance earn cz_binance pray Disaster elimination Leave your name below and transfer 0.1BNB to the address to complete a blessing and disaster relief 0xf19C12ad81Bd38D794b6deC8ad9d43557B8fa593

cz_binance The biggest pollution man made is due to plastic. Fortunately, Nature has alternative product but all is need to know you about it. climatechange ClimateCrisis environment sustainability pollution

Almost 100% of Luna Users Are Denying Terra Co-Founder's PlanICYMI: only 8% of $LUNA users somewhat agree with Do Kwon's Terra revival plan LUNA $UST Burn V1 CRYPT0_IN Burn🔥🔥V1 CRYPT0_IN Burn

cz_binance cz_binance 'eventually, you need to generate “income” to sustain it, i.e., more revenue than the expenses. Otherwise, you will run out of money and crash. ' Yeah.. total agree. Btw, interested solution from OpenWorldVision Check it out cz_binance why not list lisprocoin on binance maybe make more money to investors than luna

cz_binance Only buy Luna 🤩🤩🤩🥳🥳🥳🥳 cz_binance my luna story: last year it was trading from 3 to 4$, bought it & i am with them when they fly.this year, my luna goes bck to 3 to 4 $ watching all my profits slowly being eaten so i doubled my capital thinking it will bounced bck just like last year...but i failed & i was doomed

cz_binance Dolandırıcı hırsız luna ortağı cz_binance BOYCOT_LUNA cz_binance Do Kwon, especially Cz Binance, defrauded us by manipulating people. If our money is not returned, we will close our binance accounts as a large group and malign Binance to everyone. luna stablekwon cz_binance cz_binance LUNAtics lunacoin Terra_Luna TerraIsMoreThanUST

cz_binance Sorun çözülmelidir sonu yargidir cz_binance Luna's end will be bad for the crypto world. Burn is the best solution.. saving Luna would bring confinement to the entire crypto community.. cz_binance kindly black list to DOKOWN

Introducing Biometric Authentication on Binance | Binance Blog Binance is excited to introduce Biometric Authentication! Safeguard your crypto journey with biometrics, including face and fingerprint verification. Learn more ➡️ Very nice idea BabyDogeCoin 🐶 this function is not working on my device

cz_binance Heyy!!! Do Kwon, especially Cz Binance, defrauded us by manipulating people. If our money is not returned, we will close our binance accounts as a large group and malign Binance to everyone. luna stablekwon cz_binance cz_binance cz_binance Hilangnya kepercayaan di pasar crypto akibat insiden ini...

cz_binance I want to redeem UST at $1 on the platform cz_binance What happens to those who buy now? $LUNA cz_binance a ukrainian person lost all his money by making UST apy, at least return the UST of the ukrainian people who are victims of war. cz_binance Hello I really need help is there anyone to listen to me ?🥲

cz_binance Excellent balanced view and conclusion. cz_binance he's talking nonsense. Binance supported this project. Binance is its biggest investor. Does binance not research the project before investing? yes, that's stupid. cz_binance Is there hope for it to rise again? cz_binance When they will add Luna / USDT

Do Kwon Dissolved Terraform Labs Korea Days Before Collapse of Terra LUNA, UST – Featured Bitcoin NewsDays before the collapse of $LUNA and $UST, Do Kwon dissolved Terraform Labs Korea and shut down all offices, official records show. terra crypto cryptocurrency terrausd Thank you very much_,,,! Someone is accumulating over 2 trillion $LUNA. I’d say things will get interesting again here soon. Yo what

cz_binance MARCIANOPHONE un video cz_binance Cc stablekwon cz_binance Ubxs😘😘🌟🥳🥳 cz_binance Yes, ok. But you promoted It as safe and Happy earn. Then could you tell what Will happen tò people Who stake UST? Luna comunity sucks and Just doesnt care. You shuold tell something tò your customers. cz_binance ubxs amazing

cz_binance In fact,the collapse was already programmed to happen,It wasn't a technical accident. It was a crime deliberately programmed to happen. Do Kwon ( stablekwon ),and everyone who participated are all THIEVES.We want prison for Do Kwon and for everyone who participated in this crime cz_binance (((let’s not let one failed company kill the entire industry)))

cz_binance $luna ..... cz_binance stablekwon is ab Normal big scammer cz_binance $PGIRL has strong team and community, there is a HUGE BUYBACK and BURN ongoing. NFT Minting is now live on and NFT staking is upcoming. this is amazing. pandagirltoken $PGIRL pandagirl nft nftart giveaway BTC ADA ETH SHIB babydoge

Court documents reveal Do Kwon dissolved Terraform Labs Korea days before LUNA crashA revelatory discovery of legal documents could provide greater context to the catalyst of the infamous LUNA and UST price crash. What? Do Kwon knows a lot before the tragic event. $luna $ust $btc $eth marketmove is the next Google of crypto

cz_binance Very well explained 🙌 cz_binance I think it's gamble became gambling game of chance/luck it's not what risk is it's gamble cz_binance Can’t do ust peg $1 when Luna hard dump. Should do ust = Luna only. cz_binance Actually you are exactly in goblin mode now.! cz_binance yeah yeah yeah scammer cz ☺️

cz_binance Gözden düştünüz güven kaybettiniz hiçbirşey eskisi gibi olmayacak

We Need More Women in Government to Combat Anti-Choice Legislation - Women’s Media Center“It’s no coincidence that Texas, Tennessee, and Oklahoma all have majority-male legislatures — or that women are the minority of all state legislators. In fact, women still only make up 30% of all state legislators.” via WMC's the_fbomb the_fbomb We don’t need more Women in public office; they’re as corrupt as men. Women need constitutional EQUALITY. 3 lawsuits were filed yesterday in NY, Michigan & Rhode Island to protect Roe from ever being overturned by establishing ERA as our 28th Amendment once and for all. the_fbomb These new lawsuits can protect Roe from ever being overturned by any Supreme Court. the_fbomb Dreadful!

The UST/LUNA incident was a regrettable one that affected many people ..tokens .Introducing Biometric Authentication on Binance 2022-05-18 Safeguard your crypto journey with biometrics, including face and fingerprint verification.

At Binance, our first focus is always to protect affected users. Sadly, there are no great solutions here that can please everyone. Many proposals were discussed in the community. Do Kwon shared all the details with the community previously. Unfortunately, each had its drawbacks. I voiced my opinions about the incident openly on . And as innovators, we continually look for new tools our users can leverage.

Binance has also volunteered to let the Terra project team focus on helping the retail guys first before us. Source: Terra Governance All Luna Classic stakers will get an airdrop of new Luna tokens. There Are Many Lessons to Be Learned Here Let’s take a look at the design flaws. Theoretically speaking, when you peg to one asset using a different asset as collateral, there will always be a chance for under collateralization or depegging. Even if it is over collateralized by 10x, the collateral asset can crash more than 10x. Ads Record 12. Nothing is 100% stable (relative to something else) in this world. Most Android phones also come with fingerprint sensors now.

The most stupid design flaw is thinking that minting more of an asset will increase its total value (market cap) . Printing money does not create value; it just dilutes existing holders. While the community vote shows that the majority of investors are not in favor of such a fundamental change, the official governance voting may have completely different results as a larger pool of voters would be included. Exponentially minting LUNA made the problem a lot worse. Whoever designed this should have their head checked. The other fundamental flaw was the over-aggressive incentives. Stablecoin UST sits at around $0. This is where biometrics comes into play.

Specifically, Anchor’s 20% fixed APY to push for (in-organic) growth. Let’s strip away all the fluffy stuff and look at fundamentals. You can use incentives to attract users to your ecosystem. But eventually, you need to generate “income” to sustain it, i.e. Biometrics improves the user experience by replacing these processes with a simple glance or touch of the screen.

, more revenue than the expenses. Otherwise, you will run out of money and crash. However, in this case, the “income” concept is confused as the project team probably included their own token sales or appreciation in the value of LUNA as “income”. This approach is flawed. People come in because of the incentives, yes, and the valuation of LUNA goes up. For example, a scammer who gains access to a user’s email account can easily intercept 2FA verification codes.

And more incentives are given out to more people. But you haven’t created any value yet. High APYs Don’t Necessarily Mean Healthy Projects It’s now obvious that the whole thing was built on a self-perpetuating, shallow concept. While Terra did have an ecosystem with some use cases, the speed of growth of the ecosystem did not match the speed of the incentives used to attract new users. The growth was “hollow”. All biometric information is stored locally on users’ devices.

Eventually, the bubble burst, and here we are. Key lesson: don’t just chase high APY. Look at fundamentals. Where Attempting to Restore the Peg Went Wrong The Terra team was slow in using their reserves to restore the peg. The entire incident may have been avoided if they had used their reserves when the de-peg was at 5%. For users, this minimizes your risk and gives you peace of mind knowing your funds won’t fall into the wrong hands.

After the value of the coins had already crashed by 99% (or $80 billion), they tried to use $3 billion to do the rescue. Of course, this didn’t work. In this case, it didn’t look like a scam. It was just (sorry for the lack of a more polite word) stupid. Lesson two: always be operationally extremely responsive. We’ve outlined each step below to help you get started.

The Terra team was also very slow and infrequent in their communication with the community, which further eroded any lingering trust users had with them. Lesson three: always communicate frequently with your users, especially in times of crisis. Lastly, I have mixed feelings about the revival plans provided by the Terra team. But as I said, regardless of my personal feelings, we will be here to support the community’s decision. Will There Be Spillover Effects? Yes, of course. 3.

There have already been shockwaves sent throughout the entire crypto ecosystem. USDT de-pegged to 0.96 for a bit but recovered quickly. Many crypto projects were and are still negatively impacted in many ways. If nothing else, most crypto prices dropped. Press Security → Biometric Authentication → Add Biometric Authentication What’s Next? We’re always looking for innovative ways to safeguard the crypto experience.

Even bitcoin dropped about 20%. Many people withdrew their funds from high APY projects. But if you think about it, this may not be a bad thing in the long run. Some shocks are good for building a solid foundation. Some solid projects actually “benefited” in a way.

BUSD went to 1.1 in pegging and saw an inflow of funds over the last weeks. Resilience Is Present in the Crypto Ecosystem Honestly, I am pleased by the resilience the crypto industry has shown. The combined size of UST and LUNA was bigger than Lehman Brothers when it failed. Bitcoin only dropped roughly 20% from $40,000 to $30,000.

This sometimes happens even when there is only positive news for bitcoin. Overall, most other projects stood up fine. One thing that’s hard for people who are used to centralized systems to understand about decentralized systems is their resilience. In a centralized system, all the banks operate similarly (the regulations require them to do so). They all take reserves from a central bank, and when one bank fails, it has a spillover effect on all the other banks.

In a decentralized system, all the stablecoins work in different ways. There are no common standards or reserves. However, when one fails, the others are less affected. Even without bailouts, all other major stablecoins withstood the shock, and most other crypto projects are fine. Will Regulators Toughen Their Stance on Stable Coins given This Incident? I don’t know what each regulator thinks or will do.

So far, I have seen mostly encouraging responses from the few who regularly keep in touch with me. Of course, this is a biased selection as the people who keep in close contact with me are mostly very crypto-friendly. I do believe we need more guidelines around how stable coins should be regulated. But one regulator said it best: “We definitely need to pay more attention to algorithmic stablecoins, but let’s not let one failed company kill the entire industry. We should continue to push forward.

” How Do We Avoid Systematic Risks like These in the Future? This is the trillion-dollar question. I don’t think there is an absolute answer here. Nothing is risk-free. The fiat currency you use today has its risks too. The oldest currency in use today is less than 330 years old, the British pound.

All the currencies before that are gone. We could ban or shut down everything, but that would also kill innovation. To prevent bank failure and mismanagement, we don’t shut down all banks. At the end of the day, there are several things you can do to reduce systematic risk. As an investor, diversify your portfolio.

Don’t put all your savings in one coin because it offers a high APY (Annual Percentage Yield). In fact, stay away from super high APY investments. Those hardly last. High APY=high risk. Most importantly, educate yourself.

Learn about financial literacy every day. Visit Binance Academy and explore everything it has to offer (sorry, I have to do a bit of sales here). As an industry, we are resilient. While instances like the one with LUNA and UST are regrettable, we are committed to playing a crucial part in building a sustainable, enriching blockchain ecosystem for all. Like this post .