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A few weeks ago I responded to @tbr90’s tweet with a brief outline of how a wealthy attacker could not only break @terra_money but profit heavily doing it with a Soros style Black Wednesday attack. Below I provide a detailed breadown...~$1B capital needed.
https://twitter.com/tbr90/status/1438497931951288333?s=20
https://twitter.com/tbr90/status/1438497931951288333?s=20
2. Purchase $100k of $LUNA and immediately withdraw from exchange and swap to $UST using the Terra seigniorage mechanism. Fee is 0.5%. Repeat 10,000 times (use a bot) so you accumulate 500M UST for ~$502.5M.
https://docs.terra.money/Reference/Terra-core/Module-specifications/spec-market.html#swap-procedure
PnL impact: -$2.5M
Net PnL: -$2.5M
https://docs.terra.money/Reference/Terra-core/Module-specifications/spec-market.html#swap-procedure
PnL impact: -$2.5M
Net PnL: -$2.5M
3. Sell your initial $100M $LUNA from step 1. Since there has been $500M of $LUNA market bought in step 2 looking at the current order books/PA I think a reasonable estimate here is +30% or $30M profit.
PnL impact: +$30M
Net PnL: +$27.5M
PnL impact: +$30M
Net PnL: +$27.5M
4. Deposit $200M worth of bETH on @Anchor_Protocol and take a loan out for 100M $UST
PnL impact: $0
Net PnL: +$27.5M
PnL impact: $0
Net PnL: +$27.5M
6. In $100k chunks use seignorage again to convert 500M $UST (step 2) and 100M $UST (step 4) to $LUNA. After each conversion dump the $LUNA. Conversion fee 0.5% and the rate limit means this step will take a week. 600M UST sold for ~$597M.
PnL impact: -$3M
Net PnL: +$24.5M
PnL impact: -$3M
Net PnL: +$24.5M
7. Close the $LUNA short from step 5. Since there has been $600M of $LUNA market sold in step 6 I think a reasonable estimate here is -30% for $LUNA price or $30M profit.
PnL: $30M
Net PnL: +$54.5M
PnL: $30M
Net PnL: +$54.5M
8. Payback loan from step 4 and reclaim your bETH.
PnL: $0M
Net PnL: +$54.5M
PnL: $0M
Net PnL: +$54.5M
9. Repeat. After a few iterations the protocol will collapse at step 6. Many #Lunatics assume that $LUNA can never have a value of 0. This is only true if the future circulating supply of $LUNA isn’t ∞ but above process leads to ∞ $LUNA being minted… https://twitter.com/FreddieRaynolds/status/1452422617806299140?s=20
Maybe @nope_its_lily can raise a fund to do it?
Also for anyone reading this thread for the first time months later the follow up thread answering common Qs is here: https://twitter.com/FreddieRaynolds/status/1465508806759170050?s=20&t=ia7-VYzAv_npJU4wYJLOMQ
