Leggi questo articolo in Italiano
Mantra like LUNA? Is there a domino effect? Let's clarify
By Daniele Corno
After the collapse of Mantra's OM token, the community fears a domino effect like LUNA: Does it really make sense? Let's clarify
Similar graphs, but...
Following the sudden collapse of the OM token of Mantra, the community is alarmed about a possible domino effect. The memory of Terra-Luna is indelible for many, but do they really have anything in common?
In practice, nothing in common except the graph. While remaining impartial, there are numerous considerations to be made.
The collapse of the OM token, the real causes of which “told” by the team and the founder are yet to be verified, is closely related to the token. Although on a purely numerical level, the market cap collapsed from $6 billion to $700 million, there were no effects on “REAL” assets and value.
The total TVL prior to the collapse on the layer 1 Mantra Chain was just over $4 million, of which 60% was concentrated in the USDY/USDC liquidity pool on the Mantra Swap protocol.
The network’s use is infinitesimal compared to the scope of Terra-Luna before the collapse, to such an extent that one must wonder how OM reached capitalization values exceeding $8 billion.
In comparison, Luna was a “GIANT”
Let’s take three considerations as an example, necessary to put down in black and white the current context and the lack of congruence in the comparison.
- UST: The stability of UST was directly related to the MINT and BURN mechanism of LUNA. In fact, at the time, the collapse of LUNA led to the erosion of the value of almost 19 billion UST. Cause-consequence, for OM nothing in common, except for a bitter pill for the Holders.
- DeFi and use-case: Before its collapse, Terra-Luna had hundreds of thousands of active users, thanks in particular to Anchor Protocol, with fixed returns in double figures on UST. In addition to Anchor, multiple protocols were present in the ecosystem, such as Mirror Protocol, Astroport, Prism Protocol, with total capital exceeding $2 billion. Here too, there is no comparison with Mantra, with its derisory TVL and extremely limited use cases.
- Stability Mechanism for UST: Aware of the risk of a “DEATH SPIRAL” for UST and LUNA, the Luna Foundation Guard team had built up reserves to collateralize UST’s peg with assets such as Bitcoin, BNB, USDC and USDT. Over 80,000 Bitcoin, equal to about $3 billion dollars, were in LFG’s reserves. Assets sold to “save the impossible”, fueling selling pressures on BTC already in crisis due to the snowball effect.
In conclusion, the only thing the collapse of OM and the collapse of LUNA have in common is the price graph. No collateral damage for the sector, so much so that, after more than 12 hours, the damage is close to zero. What remains is nothing more than a bitter pill for OM token holders.
