Larry Cermak, vice president of research at The Block, tweeted that LUNA below $0.05 is really just providing exit liquidity for UST holders — the amount of bad debt is endless. Even so, it only sells for $0.05.
Liquidity will start to dry up at such a rate that Terra actually has to reverse that decision anyway. Cermak said: “I think the only way out of this is to temporarily abandon UST, move to USDT/USDC, and fully develop the L1 ecosystem. Then, as L1 grows, commit to funding the collateral or repaying the UST bad debt. If That didn’t happen, and both sides could go to zero.
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