Finally, I see a worthwhile discussion about $luna.
FYI: I don't think all BTC from LFG was used to save UST.
In the figure, the left is the person who holds ust and enjoys 20% APY of anchor, the cage is the speed limiter for ust-luna exchange. Right is the one who gave up the ust This metaphor is amazing.
In a death spiral, we can imagine three scenarios:
LFG does not hold BTC/stablecoin
LFG holds Bitcoin
LFG holds stablecoin
If LFG chose stablecoin, could this be better? So far, it will.
If LFG buys stablecoin,
At the time of the crisis, its reserves held more collateral value because the price of BTC was falling.
LFG can safely use sufficient stablecoin to support ust without worrying about the price fluctuation of BTC.
May not be the "prey".
If LFG chooses stablecoin instead of BTC, it can avoid the risk of BTC price volatility in a death spiral. But, why did they choose BTC? The reason may be, that in a death spiral, LFG sells BTC to support peg, and BTC price falls. when restoring the peg, buy BTC at a lower price. Profit!!
In contrast to $waves, terra looks at the big picture. The exchange mechanism of $UST- $Luna has remained open for a long time.
Shout out to @packyM
https://www.notboring.co/p/terra-to-the-moon-and-back?s=w
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