When MAKERDAO/DAI first launched the only way to mint DAI was to lock Ethereum in a CDP contract and pull stable coin DAI out of it to be paid back later. Many algo coins (like DAI) are really a derivative of another asset. The only solution to this problem is a hardfork that changes how the difficulty change works, which isn't a big problem (and has already been solved by Digibyte technology) but Bitcoin would lose a lot of reputation and value in the short to mid term. If no one is mining Bitcoin anymore because the energy cost is higher than the reward, two weeks never happens. We might think that Bitcoin would just adjust the mining difficulty lower to make sure that blocks get mined in this situation, but Bitcoin would never make it "two weeks" to the adjustment because "two weeks" is actually however many 10 minute blocks two weeks is (6 per hour 144 per day 2,016 per two weeks). This is an interesting one because Bitcoin measures time in blocks. So on and so forth until Bitcoin dies or bottoms out. This causes a panic which dips the price and increases the mining time even more.
Then miners have no financial incentive to keep mining, which makes blocks get mined exponentially slower. In this situation (in theory) Bitcoin Black Swans and loses a bunch of value. I was beginning to think they were just pure alarmism because they never actually happen. There are surprisingly many types of death-spirals in crypto. However that will completely kill UST and everyone who has value there. I prefer the fork method because VC intervention just creates more centralization and ownership of the network. No matter what happens this is a situation most dire. There's also a very good chance that LUNA forks to a snapshot point before three days ago and "airdrops" everyone's tokens back to them before it was inflated to the moon. LUNA needs VC intervention or even more likely to sever the peg. LUNA can't pay back the debt using conversions. For every dollar of UST debt LUNA had like $1.20 in reserves backing it up. Just a few days ago LUNA's debt ratio was like 80%. I never thought I'd see such an obvious case. LUNA is the perfect example of a death-spiral in action. See look at that I step away for an hour and the price is down another 70%. And it still has a higher market cap than Hive.
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