zlacker

>>donsup+(OP)
I imagine (and hope) those 5k where mostly crypto bros who knew what they were getting into. Who else expects 15% returns from a "safe" investment?

>>riffra+v3
I didn't invest because it was only 15% gains. Sad, but true. I actually read them their material & saw it was based on Anchor Protocol. When I saw that it was based on UST, and I couldn't figure how UST was backed by anything I understood, I opted out. One of the few times in crypto where I felt "do you won research" paid off for me.

>>devout+24
What is old is new again: the UST algorithmic backing is basically https://en.wikipedia.org/wiki/Death_spiral_financing

A company that couldn't get financing any other way could get financing by issuing fixed price convertible bonds. "Fixed price convertible" means the bond can be converted into shares (of the company), but at a fixed price - aka, regardless of the value of each individual share, you are promised fixed a dollar amount of them.

This means if the share price drops, you will be "made whole" by getting issued enough shares to match the fixed price.

It's called death spiral bond, because if/when the price of such a company drops, these convertible bonds will trigger, causing the amount of shares to increase (as they issue new shares), which in turn causes the price of the existing shares to drop, ad-infinitum. Often the owners of the shares would end up with nothing as the shares' value drops to zero (or the company recovers, and they do make some money).

Swap bonds with UST, and shares with Luna, and you get the above scenario.