Terra Network Attack – What happened to small players?

Terra network is being attacked for the past 2 days by an alleged cartel to destabilize the ecosystem and also profit from the it. Though attacks on crypto ecosystems and blockchain apps is not new, the attack on Terra blockchain is unprecedented! Just before the attack, Terra’s US dollar pegged stable-coin UST had a market value of roughly 19 Billion USD and the Terra’s LUNA token was about 40 billions USD. Combined together, the total value of these two flagship tokens from Terra were about 59 billions USD!

ok here is how the $luna $ust attack was coordinated & executed. 🧵 (quoted from a friend)

– attacker OTC accumulated $1bn of UST
– borrowed $3bn in $btc
– spread around some fud about peg and bank runs
– dumped the fuck out of their $3bn $btc on market to trigger wider panic

— 4484 (@4484) May 10, 2022

Attacking and destabilizing the blockchain of this size is unprecedented and will have ripple effects across the industries, not just on crypto ecosystem. As I write this post, Terra Form Labs, the parent company of Terra blockchain is working day and night to restore stability of the ecosystem and stop UST & LUNA from death spiral. But so far it seems they are not successful in getting control of it. The UST Peg is at 0.538 and that represents a deviation of 46% percentage and likely unheard from a major stable coin.

The attack not only successfully managed to depeg UST but also drained Luna Foundation Guard’s reserves as well as LUNA token price. The sudden drop in LUNA token price has rekt small & big borrowers’s on Anchor protocol and their bonded LUNA tokens were liquidated.

In this post, lets us examine how small players on Terra blockchain (lunatics who hold less than 500 LUNA tokens) are getting rekt! The following chart shows the liquidations of small players on Anchor protocol

Now let us visualize the when were the most of the liquidations triggered on Anchor. On May 9th at 23rd hour, most amount of LUNA was liquidated from small players. Around 267K LUNA tokens were liquidated and it is followed by 208K on May 10th 21 hour!