LUNA graduated, inevitably, to the front page of the digital WSJ today.

A new breed of cryptocurrencies is seeking to replicate the stability of the dollar. But critics say they are a disaster waiting to happen.

The familiar cycle has engaged.

Journalist in gold-tier publication writes boring story with alarmist framing
Caricature deep state (Warren and Gensler) concern-trolling begins. What will become of America without Team Liz And Gary to rescue Jim and Jane Doe from the latest shadowy super-scam?
Team Liz And Gary stay on message without getting distracted.

By sticking to their message, they signal to the Home Team — “the right kind” of [liberal] prosecutors, who use government machinery to harass disliked private entities outside the courtroom — that LUNA is Officially A Target. If you attack things that are Official Targets, you become eligible for Unofficial Rewards, i.e., faster career advancement than your better-credentialed, more-cautious, higher-percentage-cases-won peers. You know who the ‘real’ bad guys are, and you don’t need to be told to get to work.

This is a feature, not a bug, of the US civil service, and is why the US civil service leadership is 99.99% shockingly-incompetent-but-slavishly-partisan Democrat sociopaths like Fauci / Birx / Collins, etc. Incompetent but prominently thuggish team players advance. West Wing idealist types get punched down.
The dangerous deep state gets to work.

Prosecutors angling for special Democratic favor use DOJ machinery to prosecute by harassment, conducting arrests, shutting down legal entities, sanctioning fiat money, and so on.
Anonymous leaked stories, baseless allegations reeking of plausibility to the 99% who’ve never heard of Terra, etc., will emerge.
Terra is used for money laundering, tax evasion, and drug dealing, like in these 2 lame examples.
Why do you care who can see your transactions if you have nothing to hide? Look at So And So, who hid $50k of income by being paid in UST.
A random businessman who took some UST will get flamboyantly arrested despite doing nothing wrong. He will win in court 3 years and $500k later, but the point isn’t for the government to win a case, it’s for the Home Team to Send a Message.
Team Liz and Gary, or whomever succeeds them as coach of Team Serious Progressives, will reward their Home Team sweat equity later.
Terra inflows may slow (if the stories are really bad) or accelerate (if the deep state botches their initial drive-by, and LUNA adroitly handles subsequent challenges while the regulatory glare raises its profile).

It’s time for the LUNA to create a regulatory mitigation strategy. Not Do Kwon, who I’m sure has been expecting this for a long time, but the LUNA community.

Back to the WSJ.

So-called “algorithmic stablecoins” have surged in popularity in recent months, spurring debate over whether they are good for the crypto industry. They are the edgy upstart sibling of conventional stablecoins—digital currencies that seek to maintain a one-to-one relationship with a traditional currency, usually the dollar.
…
“It’s a lot more dangerous than taking a T-bill and tokenizing it,” said Charles Cascarilla, chief executive of Paxos, the issuer of Binance USD …

Either Rune Christensen wasn’t available for comment when the WSJ DM’ed him, or the WSJ needs to step up their dial-a-quote game.

Proponents say algorithmic stablecoins … run autonomously on blockchain-based networks, relying on traders who could be anywhere in the world to keep them tied to the dollar. Such a design makes it more difficult for regulators to control algorithmic stablecoins, often seen as an advantage in crypto circles. U.S. regulators have stepped up their scrutiny of stablecoins in recent months but have largely focused on asset-backed coins.
… The esoteric topic of algorithmic stablecoins has become more mainstream with the startling rise of TerraUSD, the most popular such coin.
The outstanding supply of TerraUSD has grown more than 500% during the past six months to about $17.3 billion, according to crypto news and research service The Block. That makes it the fourth-largest stablecoin overall, accounting for 9.6% of total stablecoin supply, The Block’s data show.

Algostables can count on hate from 1.0 stablecoins as well as the US Treasury, which will not accept a single large pool of unregulated USD in circulation.

Regulators will probably quickly figure out that LUNA’s high network centralization, a necessary feature of keeping transaction costs down, is a major legal liability. 22 validators control 51% of all staked LUNA, and TFL’s footprint is split between the US and Singapore, a US vassal state.

A clash between LUNA and the US monetary regime was inevitable as long as LUNA scaled successfully. I hope LUNAtics are ready, because that day got a lot closer.

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