The collapse of Terra seemed inevitable from the design stage, according to anonymous developers of the Anchor Protocol who spoke to JTBC on condition of anonymity.
They say that the calculations during protocol development assumed a fixed yield of 3.6%, but a week before launch Do Kwon, head of Terraform Labs, scrapped that idea and raised the ceiling to 20%.
The JTBC sources said they repeatedly warned management about the risks and possible consequences of such a move, but Kwon did not heed their arguments. They also stressed that Terraform Labs’ head alone made all key decisions regarding the project’s development.
“Do Kwon could make people believe even the most absurd things. He did whatever he wanted,” said a channel source.
Internal Terraform Labs documents dated March–April 2022 show Kwon allegedly instructing the maintenance of the 20% yield, even if Anchor’s reserves were insufficient to pay users.
In July 2021, economist Frances Coppola warned about the risks associated with the high yield, noting that a sudden liquidity outflow from the product could trigger its collapse. In response to her remarks, Kwon replied that he “does not argue with the poor on Twitter”.
Earlier FatMan, citing his own sources at Terraform Labs, said that in 2020 the company inflated figures on the amount of funds locked in the ecosystem to attract venture capital.
A verified TFL insider has confirmed that in 2020, TFL would internally fake Terra blockchain volume to match real Chai volume. This was fraudulently used as a major selling point to raise millions from investors and VCs using the slogan ‘Korea runs on Terra.’ pic.twitter.com/LX1FxS8tzs
— FatMan (@FatManTerra) June 7, 2022
The analyst also called Kwon’s claim that Terra 2.0 belongs to the community an “outright lie”.
TFL Dawn (11.28M): https://t.co/67XVH8t50D
TFL shadow wallet (2.01M): https://t.co/k5k3g02LP2
TFL MM (0.72M): https://t.co/16CqyPcUL4
Do Kwon shadow wallet #1 (19.69M): https://t.co/kfFx1ck8gR
Do Kwon shadow wallet #2 (9.11M): https://t.co/pevv1xT0yR
Total: 42.81M LUNA (2/6)— FatMan (@FatManTerra) June 6, 2022
He said that Terraform Labs and its head used “shadow wallets” to support their own governance proposal. According to him, they participated in the airdrop and now own about 42 million LUNA.
In May 2022 FatMan accused Kwon and venture capitalists of manipulating Mirror Protocol governance and deceiving retail investors.
In the same month it emerged that the DeFi project was the victim of an exploit worth more than $90 million.
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