CEO and founder of Pershing Square Capital Management Bill Ackman has said that the collapse of Terra is like the collapse of a financial pyramid. He has said:
“For me, the Terra ‘algorithm’ is a crypto version of a pyramid scheme. There is no business. Investors were promised a 20% yield. It is provided by a token whose value is supported by the demand of new investors.”
Ackman has cited the attractive terms at Anchor. Until recently, the largest protocol in the Terra ecosystem allowed for a 20% return on deposits in UST. Reducing the rate to 17.87% led to the loss of the stablecoin peg to the US dollar and the subsequent collapse of the ecosystem.
The billionaire has added that the growth in the price of the native token was supported by demand from new users and limited supply due to vesting.
According to the CEO of Pershing Square Capital Management, the scheme of work and hype has allowed Terra to reach such a scale that they began to threaten the wholse cryptocurrency market.