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“Are you not entertained?”
— Maximus Decimus Meridius, Gladiator 
People love bets
Finance is an industry built on speculation, so it should come as no surprise that people love a good wager.
In 2007, Ted Seides of Protege Partners famously bet Warren Buffett $1 million that hedge funds would outperform the S&P 500 over the coming decade.
Ted picked a basket of hedge funds, Buffett bought an S&P 500 index. Technicalities were decided on (money goes to charity, fees excluded, etc…) and then they waited.
Seides technically lost the bet, but in the end, it ended up being a win for everyone involved.
Ted and Protege got plenty of free publicity, Buffett got to smugly gloat that hedge fund managers’ fees were too high, and $1 million got donated to charity.
In the age of social media, betting looks…a little different.
It’s 2022. People have shorter attention spans, and inflation is raging. No one’s getting out of bed for a $1 million bet between two investors.
Today what we have is Elon Musk challenging Vladimir Putin in single combat, the stakes of which are, apparently, Ukraine.
Participants in crypto Twitter got their own popcorn moment this week when Do Kwon, founder and leader of the Terra ecosystem, accepted a bet of his own. Two bets, actually.
The stakes? $22 million in LUNA custodied by UpOnly podcast host, Cobie.
The backstory
UST’s market cap has recently surpassed $15 billion, making it the fourth largest stablecoin, and its growth trajectory makes it very likely to soon pass Binance’s BUSD (which is actually issued by Paxos). 
UST’s market cap has been remarkably up-only over the past month
The growth is unquestionably impressive, with LUNA seemingly the only crypto that is defying gravity at the moment. But some critics are asking, “Is it sustainable?”
A pseudonymous trader going by the name Sensei Algod wrote a (not too positive) Twitter thread on Terra’s tokenomics. They publicly challenged anyone to a $1 million bet that the price of LUNA would be lower this time next year.
But like we said before, no one is getting out of bed for a $1 million bet these days. So within 24 hours:
The best part of this entire exchange was that no one told Cobie about the second $10 million bet that got sent to him. 
Why are you telling me all of this?
This is vintage CT! I’m not sure that there really needs to be a point here.
The only silver lining to bear markets in crypto is that Twitter becomes 10 times more entertaining.
Short of Elon Musk riding a bear shirtless into battle with Putin, I’d say it doesn’t get much better than this.
Now similarly to the Buffett bet, some technicalities had to be worked out, and it’s worth diving into what the odds of winning are.
It’s a winner-take-all bet, so effectively a binary option; if LUNA trades at $87.99 at maturity, Algod and GCR get the entire pot, while if LUNA trades at $88.01 Kwon adds to his already legendary stack.
And, similarly to Buffett, he says he will split the proceeds between a charity protocol on Terra and other Terra ecosystem coins.
Lily Francus, director and quantitative research strategist at Moody's Analytics, thinks that Do likely overpaid for his call option. If options existed on LUNA (they don’t as far as I know), then Algod could lock in a risk-free profit with a 1-year call spread.
I think at the end of the day, Do and other visionary founders like him are a reminder that no matter how trustless crypto is, industries are always built on people.
As Andre Cronje recently reminded us when he abandoned Fantom — and $5 billion of TVL followed him — cults of personality will never lose their power.
As a side note, the Luna Foundation Guard (LFG) collateralizing UST with bitcoin is the most interesting thing happening in crypto today.
Yesterday’s newsletter was about the fraying of the petrodollar system. Tomorrow’s will be on the creation of a new, bitcoin-backed decentralized currency and what that future could look like. — Mike Ippolito (Byron will be back next week)
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Written by @MikeIppolito_ and @aaronhasapen.
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