Goodbye Terra?
That was certainly a Friday the 13th to remember. Terra’s stablecoin, UST, started de-pegging on Tuesday 10th May, and by Friday 13th May the death spiral that ensued between UST and LUNA resulted in both tokens losing their value at a rapid pace.
This article is not about the fall of Terra because by now, there would have been tons of writeups analyzing what had transpired or what had gone wrong, but rather on how this unfortunate event had resulted in what was effectively a complete wipeout of LUNA Put-Selling Defi Options Vaults (DOVs).
Disclaimer: This is not investment or financial advice, but a sharing of my adventures and learnings in crypto space, where I conduct various experiments with different tokens and protocols across different blockchains.
Put-Selling DOVs
I am a fan of Defi Options Vaults (DOVs) which to me is a form of yield diversification. I had also written about my experience with the USDC (BTC) Put-Selling DOVs on Solana.
Most DOVs seem to work with a 5% chance of in-the-money (ITM) settlements which will result in losses for the DOV. But because DOVs are meant as investment tools for longer time horizons, the expectation is that over time, the profits from…
