Jon Wu on What's Happening With Terra-Luna, UST, and the Broken Peg
The bank analogy is just so bad... bank deposits only have a certain percent of cash available for withdrawal that is true (the BTC in the analogy above), however the fundamental difference is that the other 80% is backed by real assets with real value, home loans, business loans, etc. Not "magic beans". Its the "magic beans" that make something a ponzi!
Jon Wu always crushes analysis. Cool to see him guest post.
I'm sorry but the argument that "there are some assets, its not a ponzi, it was a bank run", implies a lack of understanding of ponzi schemes. Most ponzis do have assets in there somewhere (by simply not paying out everything that was brought in to the next guy you build up some reserves, which is essentially what was done here), and recoveries are typically 5-30%. If tether were to collapse that would be more analogous to a bank run. This is very much a ponzi scheme masked by complexity.
I have to say that the gravity balls image sums up the crypto bro world for me. I'm also a bro but seeing all that type of stuff turns my stomach. Very macho and nerdy, got to be the worst two combos IMO. Anyway, good read. thanks.
Very nice writeup, but ultimately it would be more useful to detail how an attacker profits by breaking the Terra buck.