Research analysts at Nansen have identified seven whale wallets behind the Terra (CRYPTO: LUNA) death spiral in May.
What Happened: According to an on-chain investigation from Nansen, a small number of players were able to identify vulnerabilities early into the TerraUSD (CRYPTO: UST) de-peg, which led to a subsequent exploit.
After piecing together a chain of events, analysts identified seven wallets that were most likely to have played a significant role in the UST de-peg.
The research finds that these wallets were the first to notice the vulnerabilities in UST’s peg to other stablecoins, specifically in the shallow liquidity of DeFi protocol Curve’s pools.
These wallets then went on to withdraw UST funds from Terra’s Anchor protocol and bridge them from Terra to Ethereum (CRYPTO: ETH) through Wormhole. They swapped large amounts of UST to other stablecoins in Curve’s liquidity pool, arbitraging price discrepancies across Curve, decentralized exchanges and centralized exchanges.
Between May 7 and May 8, Nansen found that the top 18 wallets accounted for 77% of total UST flows to Curve.
“As such, we refute the popular narrative of one 'attacker' or 'hacker' working to destabilize UST,” the analysts said.
“The de-peg of UST could instead have resulted from the investment decisions of several well-funded entities, e.g. to abide by risk management constraints or alternatively to reduce UST allocations deposited into Anchor in the context of turbulent macroeconomic and market conditions,” the researchers said.
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