Stability Reserve Dumping MIR

I’ve decided to un-delete this post after many requests from the community , while these topics discussed below are controversial i dont think TFL or anyone else is acting in malice. I think if this is indeed as it appears TFL is most definitely acting in the best interest of the community. I also realize these type of market making activities can not be made transparent in realtime due to front running and other concerns. At the time of undeleting this post it has over 200 views, and i think it’s best this is left here to allow TFL to respond if they so choose.

Hi there,

I recently came across some posts on twitter scrutinizing the centralization of UST supply on the Ethereum network.

The wallet in question is Zapper - Dashboard for DeFi

This wallet has sent 2.7 million mir to different exchange wallets , presumably to sell off, this happened in the last 13 hours.

Click the history tab on zapper, i went through these txes manually you can tell they are exchange wallets by where the coins are moved after being received.

I followed the transactions back to the terra blockchain and i found that the terra wallet that corresponds with the funding of this ethereum wallet is funded by the stability reserve.

I used the size and timestamp of this transaction to trace it back to the terra bridge transaction Ethereum Transaction Hash (Txhash) Details | Etherscan
Which corresponds with this terra chain transaction : Terra Finder

This is the terra chain wallet funding the ethereum address.
https://finder.terra.money/columbus-4/address/terra1dtzfwgzt8xa70zkm8gqzwz0n4zrqtngdpqejx5

Which is connected to this address Terra Finder which i believe is the stability reserve.

So why did the stability reserve dump 2.7 million Mir, and what is it gonna do with the other 800,000 Mir on the terra chain.

I mean sure the stability reserve is funding most of the liquidity , and it’s entitled to these rewards. But given the stability reserve is 50% or more of the ETH mirror liquidity this seems rather excessive.

Can Luna holder please vote on this? Is this being used to offset the current liquidity crunch ? Love the fundamentals and the innovation here, but this scares the s**t outta me. Really need some transparency here.

Transactions moving ETH MIR to exchanges.

3 Likes

Do Kwon recently respond with

“It has no conception of a “stability reserve””

Except it does, and you can see the transaction funding the stability reserve in the terra agora post below which confirms the suspected stability reserve address above.

Ok, i’ve been thinking about this for hours. Initially this thread had me extremely concerned , but i think i understand what is happening here.

This tweet is the answer : https://twitter.com/d0h0k1/status/1396368198790828034

This wallet is holding Dokwon’s and a good portion of the teams LUNA tokens. As Do mentioned there is no stability reserve .

There were a lot of tokens released in to supply over the months , and those tokens were used to mint UST , i asked about this on discord when i noticed luna being burned for UST at a loss, and i also noticed way more UST was being minted than current UST markets could handle.

See here : https://twitter.com/ConstanteMx/status/1379175616331837440

Well it turns out a huge portion of these tokens are being used to fund mirror liquidity . (Over 500 million in mirror liquidity)

So what does this mean… well it means a few things

Pros:

  1. It means that the team is not dumping their luna on us, atleast a good portion of it. Instead they are minting UST at a loss to provide liquidity for the terra money ecosystem, i think this really shows a dedication and love towards this project. And ultimately benefits the community and our future growth.

Edit: To clarify im sure the team is selling some luna on the market, but as indicated above a good portion of it is used productively to support the ecosystem.

  1. It means we probably dont need to worry about mirror or anchor liquidity for a while.

  2. It means all the fud about marketcap of luna being less than ust is meaningless , we will always have strong liquidity as long as the the coins remain lp’d

Cons:

  1. 500m is a lot of money, and actually it’s probably double this as we need to account for terra chain liquidity. This seems like a potential risk if im honest , i believe in TFL and Do, but it seems like one wallet is being used to do luna UST arbs and hold 500m in liquidity , this could be derisked a bit better.

  2. Centralization of protocol governance , so this is where i would actually agree with the decision to sell off MIR. But the problem here is these wallets are accruing a majority of the protocol rewards thus retaining full control of the protocol via governance tokens but also lowering the potential APY for new investors .

These pros and cons are mostly true even if TFL, or DO himself held these coins.

This is my best guess. @dokwon let me know if im missed anything or if im completely off.

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So i’ve been digging in to the blockchain a bit more , and it appears the recent dump was both MIR from LP and claimed rewards, MIR-UST liquidity was removed in the TX below, and then the MIR was sent to exchange wallets, UST bridged to terra. I also noticed luna lp was removed.

MIR-UST removal (There is currently 50 million USD value in that wallet in MIR-UST LP, so no need to panic)

Also from that wallet:

LUNA-USDT removal

LUNA-USDC removal

The LUNA liquidity removal was probably to mitigate losses due to the depegging. I’m not gonna speculate on the MIR removal. I have no idea.

I am only speculating based on blockchain transactions I have no other information. I’m not gonna theorize anymore , but i will double down on the theory of this being controlled by either Do himself, or being managed by someone on his team. Therefore im not too concerned . I’ll need to spend many more hours on this to make sense of it all , lots of connected wallets, intermediate wallets and Cefi exchange transactions to sort through, not specifically related to this ETH wallet but other ETH wallets funded by the “stability reserve” wallet .

Edit revised post with clarification and update.
2nd Edit: USDC, USDT/LUNA liquidity is back in the wallet.