The LUNA crash which occured last May was a disaster for the whole Crypto economy which has durably weakened the Bitcoin (BTC) and Ethereum (ETH) since many holders had to sell their coins to cover their losses.
As everyone knows now, the LUNA crash was provoked by the UST depegging through Anchor Protocol. The Crypto community has learnt a lot through this event. However, some other blockchains and protocols might have some similarities with the LUNA-UST-Anchor Protocol scheme.
We can think particularly about the scheme Ethereum-DAI-MakerDAO which seems quite similar to the scheme above.
Could Ethereum (ETH) Crash like LUNA if DAI depegs?
Before answering this question, it is crucial to understand what exactly happened with LUNA. In reality, the crash had already been predicted in 2018:
Linda Xie, who is the co-founder of Scalar Capital (and co-producer of Ethereum: The Infinite Garden, a documentary about Ethereum) had already identified the main weakness of LUNA. Using LUNA as collateral to generate UST would be similar to using MKR as collateral to generate DAI... Which is not the case. Fortunately, in MakerDAO, ETH is the collateral, not MKR... Therefore, to keep it simple, it is very unlikely that ETH crashes like LUNA did.
Disclaimer: this article does not contain any financial advice. The information is provided for general informational and educational purposes only.
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