Do Kwon, co-founder and CEO of Terraform Labs, has taken a $1 million wager that the price of LUNA will not fall below $88 by one year from now.
“Cool. I’m in,” Do Kwon wrote on Twitter on March 13, in response to a challenge issued by a self-proclaimed ‘semi-retired degen’ going by the name of ‘Sensei Algod.’
LUNA an ‘overpriced Ponzi’
Sensei Algod described LUNA, the native token of the Terra ecosystem, as an “overpriced Ponzi” that would fail.
“LUNA is a glorified TITAN, when people lose confidence it goes to zero,” he scorned, referring to the DeFi protocol Iron Finance’s token that went from $65 to $0 last year.
Claiming to have been early in identifying “gigantic Ponzis OHM, TIME and LooksRare.” Algod went on to dare anyone to “take a $1 million bet that LUNA will be lower in price one year from now.”
Do Kwon accepted the challenge, and took the mocking a step further,
“Would prefer to ask whatever your net worth is and bet 90%. But maybe this is what that is already. Furthermore, happy to do the bet where UST [Terra’s U.S. dollar-pegged stablecoin] is not depegged same time next year. I shall even give you 2:1 odds (sic).”
He never got a response. But once the duo agreed to terms on the original wager, they locked in their bets at a price of $88 per LUNA, based on CoinGecko data at the time.
Crypto analyst and influencer Jordan Fish, popularly known as Cobie, agreed to take on the role of custodian.
He provided an address to which both Do Kwon and Sensei Algod could send the equivalent of $1 million each in USDT. The Terra CEO was the first to do so, and Cobie later confirmed the address was fully funded.
“Next year same day, if the price of LUNA as reported by CoinGecko is higher than $88, he [Cobie] delivers the USDT to me, if not, he gives it to you,” Do Kwon stated. Sensei Algod accepted the terms.
The bet is in effect from March 14, 2022, to March 14, 2023.
‘Not in it for the money’
Do Kwon said he had not taken the wager for financial gain. He plans to donate $1 million to charity “regardless of the outcome of the bet”, he added.
The rest, another $1 million, he will “spend on buying Terra altcoins and burn them on March 14, 2023.”
The price of LUNA climbed 25% to a new all high time of $104.58 on March 9 after Do Kwon put up a series of funding initiatives to prop up UST, the algorithmic stablecoin on Terra that is pegged to the U.S. dollar.
UST maintains its dollar peg by burning or issuing LUNA tokens — a situation that creates an opportunity for arbitrage. As UST demand rises, as is currently the case, and more LUNA is burned, the price of the token tends to increase.
The Terra economic model has been criticized in some quarters as a Ponzi scheme. As of press time, LUNA was trading at $95.12, up nearly 1.5% since the daily close. The coin has now more than doubled in price since hitting a 2022 low of around $44 in late January.
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