Tether starting to lose its peg too, after Terra did

Re:Tether starting to lose its peg too, after Terra did by randomsearch on Thursday May 12, 2022 @05:12AM (#31351198)

Eh, but minting Luna increases the supply of Luna and thus devalues it, therefore a run means that the price of Luna increasingly drops as you mint more, meaning you have to mint more Luna, it heads to zero, you're dead. It's the opposite of stable, because a run actually accelerates itself. What am I missing here?

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Re:Tether starting to lose its peg too, after Terra did by Khoth on Thursday May 12, 2022 @05:26AM (#31351332)

When the price drops, people on reddit start saying "buy the dip it's going to the moon!" to lure in some new marks.

In the long run you're right though. Eventually you run out of people who believe them and you get the events of the last few days.

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Re:Tether starting to lose its peg too, after Terra did by wikfwikf on Thursday May 12, 2022 @05:36AM (#31351413)

You're not missing anything, that is literally how it works and the reason it is now failing.

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Re:Tether starting to lose its peg too, after Terra did by FeepingCreature on Friday May 13, 2022 @06:19AM (#31365463)

The balance is ostensibly that you do get some tangible rewards for Luna. But when the expected value of those drops below the outstanding balance as well, you still have a death spiral.

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