FatMan

Some of you thought $80m per month was bad. That's nothing. Here's how Do Kwon cashed out $2.7 billion (33 x $80m!) over the span of mere months thanks to Degenbox: the perfect mechanism to drain liquidity out of the LUNA & UST system and into hard money like USDT. (1/13)

When you're a paper billionaire, it's hard to cash out. Dumping $2b LUNA for USD on the market will cause a major crash. Sure, Do Kwon can always use his 'burn/mint' printer to convert it all to UST - but how do you turn $2b of UST into real money without breaking the peg? (2/13)

Enter Abracadabra's Degenbox: a borrowing protocol where people can loop stablecoin buys. You can stake collateral to buy UST, put it into Anchor, then use your aUST to borrow more UST, put it into Anchor again... You get the drill. It's Anchor on steroids. (3/13)

To increase liquidity (by creating enticing APYs), CVX bribes in the form of SPELL rewards were distributed to people voting for the pool's gauge through Votium. Essentially, SPELL was picking up the tab for providing deeper exit liquidity to the UST pair. (4/13)

Terra influencers shilled this strategy en masse, and thousands of retail users began flooding into Degenbox to access the high yields. Although this began quickly depleting the yield reserve, threatening Anchor's long-term sustainability, Do Kwon didn't care much. (5/13)

This created incredibly thick, near-immovable liquidity near the top of the peg zone (the $0.98 to $1.00 range). In a nutshell, it would allow for someone to cash out billions of UST for MIM at a 1:1 rate without disturbing the peg - all thanks to inorganic demand. (6/13)