New Nansen Report Details “On-Chain” Events That Led to UST Collapse


A new Nansen report has disproved rumors that one attacker was behind the epic crash of Terra’s LUNA and UST.

According to the report, which focused on the transactional data between May 7 and May 11, 2022, seven addresses/players had played a role in the depeg of UST.

The report noted that the entities had identified some vulnerabilities in the ecosystem and used it to their advantage by seizing on arbitrage opportunities presented by the depeg.

The report said that these players had taken advantage of the shallow liquidity of Curve pools backing UST as funds were withdrawn en masse from the protocol and were then bridged to Ethereum using Wormhole infrastructure.

Per Nansen,

“a small number of wallets and a likely even smaller number of entities behind these wallets led to imbalances in the Curve liquidity protocols that were regulating the parity between UST and other stablecoins.”

It continued that these entities then went on to take buying and selling positions across centralized and decentralized exchanges to exploit the differences in pricing on Curve.

Nansen said its report was based on on-chain evidence and that it did not take off-chain events that could have led to the depeg into consideration. It further said its report did not address “the impact on investors, the breakdown of net losses between wallets,  and the question of what happened to the BTC reserves backing UST.”

Terra’s founder, Do Kwon, retweeted the report.

Crypto Industry Still Recovering From UST Crash

The crypto space is still smarting from the epic crash of LUNA and UST as the industry has seen more regulatory interest within the period.

The crash had led to a loss of over $40 billion of investors’ funds, and there have been talks of reviving the network through a new airdrop and the creation of a new blockchain.

Several crypto exchanges have expressed support for this, and the LUNA 2.0 airdrop is now scheduled for May 28.

Regulators have also used the opportunity to rehash their stance on providing regulation for the industry. At the same time,  Vitalik Buterin, Ethereum’s co-founder, published a blog post on determining if an algorithmic stablecoin is sustainable.