• Tue. Jul 23rd, 2024

Ethereum (ETH) Founder Vitalik Buterin Shares ‘Important Lesson’ To Save Yourself From Crypto Ponzi Schemes

BySamyuktha Sriram

Jul 28, 2022
Ethereum (ETH) Founder Vitalik Buterin Shares 'Important Lesson' To Save Yourself From Crypto Ponzi Schemes


Ethereum ETH/USD creator Vitalik Buterin cautioned his Twitter followers against investing in cryptocurrency projects that offer farfetched returns. 

What Happened: In a tweet on Wednesday, Buterin said that an “important lesson for the crypto space” was knowing that if a protocol offers a 20% annual percentage rate (APR) for staking cryptocurrency, then it is likely to be a Ponzi.

“We can’t lock out baddies with hard power, so we have to guard against them with our soft power,” said Buterin on Twitter.

Why It Matters: While not all cryptocurrency investors were in agreement, arguing that the yield offered largely depends on how the project itself functions, it is worth noting that Terra’s LUNA/USD Anchor Protocol offered investors a 20% APR.

When  the ecosystem was thriving, more than 70% of TerraUSD UST/USD holders had deposited their assets into the DeFi platform. At one point in time, Anchor had $17.15 billion worth of Total Value Locked (TVL) on its platform – something that came crashing down overnight when the algorithmic stablecoin UST lots its peg.

The Terra ecosystem’s collapse had cascading effects through the entire crypto industry. Bitcoin BTC/USD, Ethereum and the wider crypto market saw sharp declines following the event, while a number of crypto lenders and funds filed for bankruptcy.

Price Action:According to data from Benzinga Pro, at press time, BTC was trading at $22,765, up 7.32% and ETH was trading at $1,612, up 12% over 24 hours.


Image and article originally from www.benzinga.com. Read the original article here.