Why did Terra (LUNA) suffer at the expense of Wonderland (TIME)? Covered: Wonderland Hell What Does Terra Have To Do With It? Wonderland Hell Strange news of misgivings, misadventures, and misunderstandings are part and parcel for crypto since the very beginning (think Mt. Gox). No exception is the very new story surrounding Wonderland (TIME), a […] The post Why Did the Wonderland (TIME) Disaster Hurt Terra? appeared first on CryptosRus.

Why Did the Wonderland (TIME) Disaster Hurt Terra?

Why did Terra (LUNA) suffer at the expense of Wonderland (TIME)?

Covered:

  • Wonderland Hell
  • What Does Terra Have To Do With It?

Wonderland Hell

Strange news of misgivings, misadventures, and misunderstandings are part and parcel for crypto since the very beginning (think Mt. Gox). No exception is the very new story surrounding Wonderland (TIME), a fork from DeFi protocol Olympus DAO which runs on Avalanche. Wonderland has “over $660 million in its treasury balance, and promises users a jaw-dropping 83,000% APY on staked assets.”

However, things are not wonderful in Wonderland as of late. When news of its ties to the infamous Ponzi, now defunct Canadian exchange QuadrigaCX came out, things began to unravel. Michael Patryn, the treasury manager of Wonderland was outed as the former convict and co-founder of the Quadriga Ponzi which resulted in over 136 million dollars stolen from investors. 

convicted fraudster michael patryn

As Wonderland has unraveled over the month, its TIME token is down from over $3,647 to $369.84 just in January, as most pulled money out rightfully leary over a convicted conman having control over the treasury. The project has collapsed since reaching all-time highs, down over 94% in the last 90 days.

In fact, the disgraced founder of Wonderland, Daniele Sestagalli, has announced the project is completely done, which makes it hard to believe it has not reached 0 yet. “Wonderland experiment is coming to an end. It is clear from the vote that the community is divided”, he said in a tweet this morning. Yet another example of how murky the waters of DeFi can be.

What Does Terra Have To Do With It?

So why did this hurt Terra and the LUNA token, which dumped on the scam news and is down on the week over 21% while everything else is in the green weekly? It all has to do with Terra’s link to crypto called Magic Internet Money (MIM). MIM is the crypto that underlies DeFi lending protocol Abracadabra.

“Users can borrow MIM from the protocol by placing down collateral. They can then take that MIM and use it elsewhere. One of the places that MIM holders popularly take their assets is the Wonderland platform.” Abracadabra and Wonderland were close partners. So again, why is Terra affected?

This is because MIM and LUNA are both members of Terra’s ecosystem. Moreover, its because MIM and TerraUSD are closely linked. Why? Because Abracadra “offers a yield farming tool that links MIM and UST.” This is what caused panic and investors running from MIM, resulting in MIM and then UST from un-pegging from the dollar. 

Finally, this hurt LUNA because of the aforementioned relationships with the fraudster and convicted con-artist Patryn. This story just goes to show that in DeFI, one bad apple can cause rotting many trees down. Terra’s UST is now pegged back to normal, and many holders are saying this was a great stress test for the protocol.

*We will keep you updated on the Wonderland woes.

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