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Terraform Lab’s Do Kwon Makes a $1M Public Bet on LUNA Price in One Year’s Time



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The Terra community has started the week with news of a series of massive wagers between the Terraform Labs CEO and pseudonymous crypto traders.

The first was initiated by a trader with the Twitter username Sensei Algod. He stated he was willing to publicly bet with any taker on the price of Terra’s native token after a year. Terraform Labs CEO and founder Do Kwon composedly accepted the bet and challenged him to another related bet, cheekily offering higher odds.

A different trader also joined in on the action and invited Kwon to a similar bet with a significantly raised stake.

A $1 million bet: Time and market forces will tell who wins

Sensei Algod, a renowned Terra critic, yesterday proposed a $1 million bet that in one year (from 14 March), the LUNA token would be trading lower than $88 – its price at the time of the placing the bet. The trader tagged three popular accounts associated with Terra: – Do Kwon, Crypto Harry, and Maria Macedo.

Do Kwon, the ‘master of stablecoin LUNA,’ accepted the bet two hours later, affirming his belief that the native token on Terra would be trading higher come March next year.

“Cool, I’m in,” Do Kwon wrote as a reply before increasing the stakes by adding that he would gladly accept a bet with the wagered sum equivalent to 90% of Algod’s net worth.

The two agreed on the terms of the bet before sending the sum in Tether (USDT) to an escrow account under Cobie – alias of Jordan Fish, the host of the UpOnly podcast. The wallet is befittingly named “Cobie: LUNA Bet Escrow” On EtherScan.

The price of LUNA will be calculated using a 24hr time-weighted average price model on 14 March next year, with the winner taking it all.

Kwon initiated another bet on whether UST will hold onto its peg by March next year, suggesting 2:1 odds if Algod took it up.

Not the only bets on the day

The bold wager attracted many other crypto personalities, including a pseudonymous ‘forecaster retired trader’ GCR, who made a similar bet.

“Interested in same bet for 10 million dollars [considered offering 50 million, but escrow becomes tricky] Would donate half to charity Expect price to pump short term, but in 1 year, supremely confident the current narrative is lost,” GCR wrote.

Do Kwon stepped up again, with Cobie still acting as the escrow agent. The bet wallet address shows a $10 million USD Coin (USDC) deposit from the crypto trader. Do Kwon hadn’t fulfilled his end of the bet at the time of writing, but it’s unlikely he backs out.

Sensei Algod is one of the crypto traders that have found fault with Terra’s ecosystem, specifically its UST and LUNA tokenomic relation.

Here are the arguments from both sides

Terra’s largest stable coin by market capital, TerraUSD (UST), uses the LUNA token as its stabilizing trigger. As opposed to a cash or commercial paper peg, the UST stablecoin burns LUNA to mint new UST, and conversely, UST is destroyed and removed from circulation when swapped for LUNA. This swap mechanism is the issue Algod and a few others have expressed concerns over.

Last month, Algod shared a Twitter thread describing Terra as a ‘Ponzi scheme.’

Taking a jab at the Do Kwon-led project, he stated, “What Lunatics are expecting is that demand will infinitely keep exceeding supply, the moment supply exceeds demand people will panic and start mass redeeming ust for luna -> usdt Does this remind you of something? (cough cough ponzi)”

Algod and his fellow critics argue that a prolonged period of increased UST demand will result in lots of LUNA tokens burning, which could, in turn, trigger a price crash. A massive price slump of LUNA (which serves as the UST peg) will consequently make UST lose its peg.

Notably, the Luna Foundation Guard recently raised $1 billion for a bitcoin-denominated TerraUSD reserve. The non-profit organization aims to reduce the UST stable coin’s reliance on LUNA with this move.

Terra (LUNA) market performance

The bet comes at a time the LUNA token is seeing a period of extended gains. The native token on Terra rose to set a new all-time high late last week before embarking on a correction path. It was trading at $91.14 at writing as per Messari data.

LUNA/USD chart since the start of February (Messari)

Algod is confident that the recent upward momentum that started last month will wane with time.

In a separate event, Do Kwon last Friday revealed that Terraform Labs had channeled $12 million LUNA to the Luna Foundation Guard. The TFL chief executive explained that the donation would be burnt and minted into $1.2 billion Terra USD.

“The funds will be burned to mint $UST, and thereafter used to grow LFG’s reserves. At current prices, this reflects another 1.2B incoming addition to the $UST reserves.”

To learn more about Terra visit our Investing in Terra guide.

Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.

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