According to knifefight’s tweet in April, the UST/Terra structure was described as a “Ponzi scheme that used hubris for collateral.” Although this may seem to be a rather harsh statement about the stablecoin, UST, the UST/Terra team responded with a tweet in April stating, “Although we’re not quite sure who knifefight is, they seem to be very passionate about us. We’re always happy to hear feedback, even if it’s critical.
This is how we make sure we’re on the right track.” In addition to this, knifefight responded on the same day with “Look at the code. It’s a Ponzi scheme. The UST team will clean it up, and you can keep it running until then. We recommend that readers do their own research and analyze the evidence for themselves before coming to any conclusions.
When someone starts talking about a stable coin, the first thing that comes to mind is Tether, which is an unstable coin. According to knifefight, the UST/Terra stablecoin structure was a circular Ponzi scheme that used hubris for collateral. knifefight said: “They sold their own hubris as the backing to a stablecoin.”
The UST/Terra team would employ the use of multi-sig for each of their individual wallets, which would be difficult to exploit. However, the excess hubris in the team lead to bad decision making, and some members overrode the vote in order to make a decision, which ended up sinking the entire stablecoin.
However UST has been accused of running a Ponzi scheme. Popular YouTuber knifefight (who is not to be confused with knifefight) posted a video to his channel describing the plan as “the sickest ponzi scheme ever.” He went on to say that “the hubris of the team was used as collateral for the ICO.” The foundation has defended itself, claiming that the accusation is “false and misleading.”
