Crypto researcher unpacks why UST broke down and what happens next

Episode 41 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Mika Honkasalo, Crypto Researcher.

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Bitcoin traded below $30,000 on Monday, amid market uncertainty brought about by the ‘depegging' of UST—an algorithmic stablecoin whose value is supposed to remain equivalent to $1.

At publication, UST is trading at $0.92, although the ‘stablecoin’ saw lows of $0.6050 on the Binance UST/USDT trading pair.

In this breaking episode of The Scoop, host Frank Chaparro spoke with crypto researcher Mika Honkasalo, who appeared on the podcast to provide a detailed look at how the UST drama is unfolding.

As Honkasalo explained, while UST has experienced depegging before, this time around is structurally different:

“I think people at first didn't really realize that it would be a real thing, because they had seen something similar before and they didn't realize that the structure of the market had become a lot more averse to UST than it previously had. And I think what you're seeing today is sort of that just escalating or going further.”

Although the Luna Foundation Guard announced plans yesterday to support the UST peg with $1.5 billion worth of assets, whether or not UST returns to its peg will likely come down to whether the buyers or sellers win out.

As Honkasalo noted during the interview,

“Whether or not it maintains the peg today is very much a question of: if the sellers sort of run out of tokens and the buyers have more, the buyers will live to fight another day here in the mid-term.”

As for the future fate of Luna and UST, Honkasalo thinks much of its success will rest on macro forces outside of its control.

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“I think that if the market turns positive, it will be much easier to keep the whole Luna ecosystem going. But if it continues to be more negative than this, the next wave of sells could be even much worse.”

During this episode, Chaparro and Honkasalo also discuss:

  • Market catalysts in crypto
  • Changes in venture capital fund flows
  • Layer-2 scaling solutions

This episode is brought to you by our sponsors FireblocksCoinbase Prime & Cross River
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© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Authors

Davis Quinton is the Director of Podcasts at The Block and runs our flagship podcast called The Scoop, hosted by Frank Chaparro. Since joining The Block as an 'intern' in early 2022, he has worked closely with leaders across departments to translate The Block's written content into engaging multimedia formats. He holds a degree in Social Research & Public Policy from New York University in Abu Dhabi and is based in Sydney, Australia.
Frank Chaparro is Host of The Scoop podcast and Director of Special Projects. He also writes a biweekly newsletter. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. For inquiries or tips, email [email protected].