Researchers at Queen Mary University of London have unveiled a study detailing the collapse of the Terra ecosystem, including the stablecoin TerraUSD and the LUNA token.
Circumstances of the Collapse
In May 2022, the Terra ecosystem faced a significant collapse, with the price of the LUNA token dropping from $87 to $0.0005, while the UST stablecoin lost its peg to the dollar, falling from 1:1 to 0.03:1. This situation triggered panic in the market, leading to a decline in prices of other digital assets.
Analysis of Trading Patterns
The research team, led by Dr. Richard Clegg, employed advanced mathematical methods and software to identify market manipulations. Their analysis revealed that a group of traders conducted a coordinated attack, resulting in a loss of $3.5 billion. They noted that only about five or six traders accounted for nearly all trading activities on critical days of the collapse.
New Tool for Analyzing Crypto Markets
The research not only sheds light on the collapse of TerraUSD but also introduces a new tool for analyzing trading behaviors in the crypto market. This graph-based analysis method can help uncover hidden patterns and risks in the cryptocurrency space and is applicable in other fields as well.
The study emphasizes the significance of employing complex mathematical techniques to enhance transparency and safety in financial markets, including cryptocurrencies.
