The native cryptocurrency of Terra blockchain, LUNA, fell over 20% to reach an intra-day low of $48.18. Sharp drop is connected to negative sentiments in the market caused by Terra’s connection to Magiv Internet Money (MIM) which is also connected to Wonderland (TIME). Terra’s stablecoin, UST, has also suffered from the drawdown.
The price of LUNA stumbles due to controversy connecting it to Wonderland TIME
The price of LUNA the native cryptocurrency of the Terra blockchain has experience a panic selloff that saw it drop over 20% on the day, before staging a rebound. LUNA fell to an intra-day low of $48.18.
The cause of the sharp drop originates from recent revelations in the crypto market that has LUNA holders worried. The co-founder of Wonderland (TIME), a DeFi lending protocol that is loosely connected to Abracadabra Protocol, was found to have a history that is not so stellar. Michael Patryn who is the person in question, was exposed to have been one of the co-founders of QuadrigaCX, a Canadian crypto exchange that went bust in 2019 along with over $133 million of investors’ money. Patryn also previously spent 18 months in US prison after pleading guilty to offences that included credit and bank card fraud and computer fraud amongst other crimes.
1/ This needs to be shared @0xSifu is the Co-founder of QuadrigaCX, Michael Patryn. If you are unfamiliar that is the Canadian exchange that collapsed in 2019 after the founder Gerald Cotten disappeared with $169m
I have confirmed this with Daniele over messages. pic.twitter.com/qSfWNnQPhr
advertisement— zachxbt.eth (@zachxbt) January 27, 2022
Terra’s partner, Abracadabra Protocol, has very close ties with Wonderland. Many users of Abracadabra deposit Terra’s algorithmic stablecoin, Terra USD (UST), in exchange of Abracadabra’s Magic Internet Money (MIM) which they then stake on Wonderland for an eye popping APY of 13,000%. Since it was revealed that Wonderland is likely a Ponzi, the price of UST has faltered as investors rushed to get out. UST is currently trading at around $0.993, a price that level it last saw in May last year. As UST relies on the price of LUNA to ensure price stability and maintain its peg, LUNA was also dragged down by the controversy.
Terra continues to be a DeFi powerhouse regardless of the drop
Despite the controversy that has led to the selloff, Terra is showing signs of recovery. At the time of writing, LUNA is on the rebound, currently trading at around $52.22 up 8.39%. LUNA also continues to maintain its dominance in DeFi. Terra is the second largest blockchain according to total value locked in DeFi. There is over $15 billion locked in DeFi protocols on the proof of stake blockchain per data from Defillama.
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