The French company Just Mining suffered the cost of the collapse of stablecoin terra usd (UST). His boss Owen Simonin returned to this event at BFM Business.
The collapse of stablecoin terra usd (UST) had consequences in the cryptoecosystem, including for companies whose customers were exposed to this stablecoin. The French company Just Mining in particular has suffered costs as explained by BFM Crypto on its vertical lending, as the company is particularly exposed to 30% to the luna blockchain to generate interest on the protocol as part of its products. lending.
In decentralized financing, there are liquidated pools that make it possible to trade many stack coins, including UST, DAI, etc. When UST fell, their holders sold so many of them that the liquidity pool was destabilized. This generated a higher than expected exposure to UST, which increased from 30 to 40%.
On the set of the BFM Bourse this afternoon, his boss Owen Simonin gave details of what happened. Just Mining has 65,000 customers, and 4,000 of them were placed on this loan product.
“As soon as there was the first binding, on 10 May, it reallocated part of the funds to decentralized financing, and it overexposed us to more than 40%, even over 45% at one point. And immediately we took the position to “Using part of the company’s equity to go back below 40% exposure and freeze it. When we saw it continue to decline, we launched an extraordinary contingency plan to contact customers to inform them of the situation and take emergency measures,” Owen Simonin.
Specifically, Just Mining added the company’s own funds once again to cover the lack of binding on this part of the contract, up to $ 1,250 per share. client, which covered 73% of all its customers on this contract: about 3,000 customers out of the 4,000 were positioned, and “only 27% of the customers had a risk related to the position we had on the lending product.”
As a reminder, stablecoin terra usd (UST) is one algorithmic stablecoin, which maintains its parity with the dollar with an algorithm and a cryptocurrency. With regard to stack coins, when the price of the underlying goes up or down, the value of the stack coin must match the latter. The promise is to permanently maintain parity, for example 1 UST = 1 dollar. This binding to a currency is also called a “point”. When there is a gap between the value of the underlying and the value of the stack coin, it is called a “de-point” or “loss of parity”.
The latter also takes the opportunity to remind that this “is not a discretionary management product: we can diversify the funds for the customer, but we can not make a decision on their behalf”. The company gave its customers the choice of staying or leaving their position: 27% of the subject customers left in the very short term, the first left with a loss of 17% and 8% for those who left at the start. to go out the next day or stay, says Owen Simonin.
Will Just Mining last? This scenario affects only one in sixty services offered by the company. “Although we have committed to equity, we were not obligated to do so contractually, but it was part of our moral position. We want to be our clients’ partner,” his boss explains.
“We have committed a part of the money that does not call into question any product of the platform and even the execution and operation of the structure. Of course, this is a cost to many.” Now, for the latter, it’s time for “operationality, we need to take a step back and why not recreate a more solid product”, explains the latter, who believes that the staggering loss of value of terra usd will have consequences in decentralized finance. .
Just Mining is not the only company affected by this scenario, all those offering bets or lending cryptocurrencies may also be asked to communicate in the coming days.