Terra Owner Openly Dumps And Noobs Rejoice
I don't often keep up with shitcoin news, simply because it's way too much drama and doesn't benefit me in any way, but every so often a story comes to the surface of my feed that makes me want to facepalm my brain right out the back of my head.
Terra is part of the new wave of overpromising shitcoins, the second class, along with the likes of SQLana, Avalanguish and Polkaflop. These are the "ETH" killers of this cycle, basically, the TRON, EOS and Cardano, same story, very little promise with spagetti code and questional governance and security models.
We've seen hacks happen on all these platforms, as is always the case with rug pull technology. However, the pull of getting in on the "2nd Ethereum" LOL'ing so hard at this, is still an attractive proposition for shitcoiners and normies.
What is Terra?
Terra is not a decentralised network, like most coins it's a tech company with a shitcoin while morons trade the shitcoin, the real investors hold on to the private equity and tap into the treasury. Terra has rasied $58 million over 9 rounds and with each round they receive more funding they can use for marketing and growing the brand so they can provide these early round investors with a short time to liquidity.
That's all it is, to think its anything else is kidding yourself, we've seen this playbook roll out time and time again. Terra is based Seoul, South Korea and man have the east been reknowned for smart contract shitcoin projects that go nowhere, off the top of my head I can remember last cycle was NULS, Ontology and quantum. All pieces off hot dog shit that run the same play book.
Now if you're paying attention and you see the signs, calling a spade a spade seems obvious. But shitcoiners sure do love loving in a fantasy land and why not, have it, a fool and their money are soon parted.
Why Is Terra claiming to buy Bitcoin?
Bitcoin has the deepest liquidity, the most regularity clarity, execution clarity and a thriving commuinity absorbing more mainstream users. It's NGU technology has been most efficient stores of value of the last decade and
Terra claim they are going to use the power of bitcoins price appreciation and deep liquity to back its bullshit proejct.
In a tweet, Kwon announced that the network was buying bitcoin for its reserves. These reserves back up its stablecoin UST which is used for widespread staking on the network. The founder revealed that Terra was planning to buy more than $10 billion worth of bitcoin to serve as its reserves for this token.
He referred to this move as something that will usher in a new monetary era of the Bitcoin standard.
Normies buy the news instead of selling it
There's an old trader saying buy the rumour, sell the news, well most retail investors/gamblers buy the news and sell the rumour. Hearing about this news, we've seen a sort of affinity scam take place, where Terra tries to attach itself to bitcoin to lend more legitimacy to its shitcoin project.
So people who don't get what's going on think it's some bullish signal and dump their money into Terra, providing a buy wall for Do Kwon and his cronies to dump on you his shitty unregistered security while he gets digital property in return.
It's a typical bait and switch and many are falling for it. Personally I think it's great to see so many people lining up to get rekt, it will be a good lesson for them.
Why this isn't what it seems
Terra is NOT a second layer solution using a multi-sig or checktemplateverify to lock bitcoin into a vault that then provides a cryptographic signiture that cannot be faked to validate the funds on this layer.
This is what second layers like lightning do, which will be launching a syntehtic stable coin service for individuals to use, that is properly decentralised. Using channel balancing to provide the backing and liquity.
So Terra's premise of a stable coin that is decentralised and backed by bitcoin already has a superior solution ont he way. That's one issue.
Secondly, if you're using another blockchain asset to back up another you're either using a custodial service or a centralised bridge via a smart contract, regardless of the implimentaiton, there is no way to enforce the relationship between the two, its all faith based and that's total bullshit.
It allows them to fake supply to mint based on whatever money multiplier they choose, and seems rife for internal attack.
If it is custodied, by Terra themselves, then managing their print to ratio value is going to be tough, you don't want to be sitting only in bitcoin if you're trying to back $15 billion in TerraUSD already and growing. In fact you want it to be overcollaterlised or diversify into other assets like USDT has done.
Not that USDT has done a great job of that at all with only 3% USD reserves backing up a over 60 billion dollar market but that's a story for another time.
Manging assets to back another asset comes with massive regulatory risk too, that funds can be siezed as its a central point of failure. If TerraUSD is blacklisted in certain transactions, as ALL Stablecoins have to blacklist transactions based on OFAC lists what happens to the bitcoin backing it? Does it get siezed too?
A Terra-ble idea
Most people don't ask these questions and trade on PR puff pieces and by all means gamble on it, more power to you if you can pick your exits but most of you won't and I am just here to be a little voice of reason when you're looking at these shitcoiners bullshiting dollars out of your pocket and into theirs.
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, "I am a Jessie."
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