Do kwon was a paper billionaire with no way to cash out without causing a depeg. Heres how he used degenbox to cash out into usdt/usdc
Lets start with what degenbox is: a borrowing protocol where people can loop stablecoin buys. You can stake collateral to buy UST, put it into Anchor, then use your aUST to borrow more UST, put it into Anchor again… You get the drill. It’s Anchor on steroids.
Terra influencers shilled this strategy en masse, and thousands of retail users began flooding into Degenbox to access the high yields. This created incredibly thick, near-immovable liquidity near the top of the peg zone (the $0.98 to $1.00 range). In a nutshell, it would allow for someone to cash out billions of UST for MIM at a 1:1 rate without disturbing the peg – all thanks to inorganic demand.
Here’s the total amount of MIM Do Kwon was able to cash out through the MIM/UST pool – without even moving the peg! $2,719,132,772.01, to do with what he pleases. No need to dump LUNA or sell UST on exchanges – he drummed up liquidity from all of you.
UST is the future, he said. Decentralized money is sound money, he said. UST won’t depeg, he told you. ‘Centralized stablecoins will rug you eventually.’ So why did he cash out $2.7b from UST into USDT and USDC? Were all those words just lies? (Spoiler: yes.)
Here are TFL’s outflows. $558m to KuCoin, $1.08b to Binance, $545m to Huobi – you get the gist. Ultimately, all of this money is liquidity being removed from the Terra ecosystem, exacerbating the collapse, bolstering TFL coffers – all while they lied to your face.