“The reverse of that process – a so-called “death spiral” – was inevitable. Any time the immeasurably over-levered global fiat monetary system, for whatever reason, experienced one of its periodic external shocks that skyrockets immediate demand for actual US dollar liquidity, UST investors would demand USD liquidity faster than the brittle and fundamentally flawed Terra ecosystem could provide. At some point, one UST would be worth materially less than one USD, further rattling investors and kicking off a classic bank run. Worse, with algorithmic certainty, the UST bank run would be accelerated by a corresponding hyperinflation in LUNA.” – Ross Stevens, Nic Carter, Allen Farrington
“A post-mortem on Terra, a pre-mortem on DeFi, and a glimpse of the madness to come.” Another amazing piece from NYDIG, this one detailing out the inevitable collapse of TerraUSD/LUNA algorithmic stablecoins, and a warning about the fragility and leverage that threatens the same end for the DeFi ecosystem, to follow up with the exciting things being built on top of the Bitcoin and Lightning network stack. Dont miss this one.
Some great previous reads for digging further into the ideas covered in the show:
Shelling Out: The Origins of Money – https://bitcoinaudible.com/reboot-shelling-out-the-origins-of-money-nick-szabo/
Only the Strong Survive – https://open.spotify.com/episode/7u8mzgKk1nQcwpz9EjIiet?si=1b5c0272a08c4f0a
Time Value of Bitcoin – https://bitcoinaudible.com/the-time-value-of-bitcoin/
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