After the UST and LUNA began to fall, Michael Novogratz kept a “silence mode” on the social network Twitter. Now he broke it and said that the Terra project was a great idea that didn’t work.
At the beginning of the year, Michael Novogratz got himself a tattoo based on the LUNA cryptocurrency. After the start of the Terra ecosystem crisis on May 9, he noted that the situation in the cryptocurrency market will be difficult and volatile in the near future, and algorithmic stablecoins “are waiting for a severe test.” Unfortunately, UST finally lost its peg to the US dollar, so the test failed.
“The LUNA tattoo will constantly remind me that venture capital investment requires humility. It’s a reminder of a great idea that didn’t work. We have updated our liquidity and equity reporting. Galaxy Digital does not hold algorithmic stablecoins in its holdings.” emphasized Novogratz in his statement.
The CEO of Galaxy Digital considers the unstable macroeconomic situation to be the main reason for the collapse of the Terra ecosystem. He once again emphasized that it costs from 1% to 5% of your portfolio to invest in the cryptocurrency industry and always be ready to lose this money.
“The $40 billion project was destroyed in the shortest possible time. This crash could call into question the stability of cryptocurrencies and the DeFi industry. UST was an attempt to create an algorithmic stablecoin for life in the digital world. A big idea that failed. UST growth exploded after Anchor Protocol offered an annual return of 18%-20% on UST deposits. The fall of the cryptocurrency market and the withdrawal of UST led to this scenario. There were simply not enough reserves to prevent the collapse,” Novogratz concluded.
Earlier, Pershing Square Capital Management founder and CEO Bill Ackman chided the Terra team for creating artificial demand for their product. He stated that the project, in fact, was a cryptocurrency pyramid.
Source: Bits
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