Everyone is talking about the $UST attack right now, including Janet Yellen. But no one is talking about how much money the attacker made (or how brilliant it was). Lets dig in.

Our story starts in late March, when the Luna Foundation Guard (or LFG) starts buying BTC to help back $UST. LFG started accumulating BTC on 3/22, and by March 26th had a $1bn+ BTC position. This is leg #1 that made this trade (or attack) brilliant.

The second leg comes in the form of the 4pool Frax announcement for $UST on April 1st. This added the second leg needed to help execute the strategy in a capital efficient way (liquidity will be lower and then the attack is on).

We don't know when the attacker borrowed 100k BTC to start the position, other than that it was sold into Kwon's buying (still speculation). LFG bought 15k BTC between March 27th and April 11th, so lets just take the average price between these dates ($42k).

So you have a ~$4.2bn short position built. Over the same time, the attacker builds a $1bn OTC position in $UST. The stage is now set to create a run on the bank and get paid on your BTC short. In anticipation of the 4pool, LFG initially removes $150mm from 3pool liquidity.

The liquidity was pulled on 5/8 and then the attacker uses $350mm of UST to drain curve liquidity (and LFG pulls another $100mm of liquidity).

But this only starts the de-pegging (down to 0.972 at the lows). LFG begins selling $BTC to defend the peg, causing downward pressure on BTC while the run on $UST was just getting started.

With the Curve liquidity drained, the attacker used the remainder of their $1b OTC $UST position ($650mm or so) to start offloading on Binance. As withdrawals from Anchor turned from concern into panic, this caused a real de-peg as people fled for the exits

So LFG is selling $BTC to restore the peg while the attacker is selling $UST on Binance. Eventually the chain gets congested and the CEXs suspend withdrawals of $UST, fueling the bank run panic. $UST de-pegs to 60c at the bottom, while $BTC bleeds out.

The crypto community panics as they wonder how much $BTC will be sold to keep the peg. There are liquidations across the board and LUNA pukes because of its redemption mechanism (the attacker very well could have shorted LUNA as well). BTC fell 25% from $42k on 4/11 to $31.3k

So how much did our attacker make? There aren't details on where they covered obviously, but if they are able to cover (or buy back) the entire position at ~$32k, that means they made $952mm on the short.

On the $350mm of $UST curve dumps I don't think they took much of a loss, lets assume 3% or just $11m. And lets assume that all the Binance dumps were done at 80c, thats another $125mm cost of doing business. For a grand total profit of $815mm (bf borrow cost).

BTC was the perfect playground for the trade, as the liquidity was there to pull it off. While having LFG involved in BTC, and foreseeing they would sell to keep the peg (and prevent LUNA from dying) was the kicker.

Lastly, the liquidity being low on 3pool in advance of 4pool allowed the attacker to drain it with only $350mm, causing the broader panic in both BTC and $UST. Any shorts on LUNA would've added a lot of P&L here as well, with it falling -65% since 5/7.

And for the reply guys, yes I know a lot of this involves some speculation & assumptions. But a lot of money was made here either way, and I thought it would be cool to dive into how they did it.

Photo by Juanjo Jaramillo on Unsplash

Calling APIs is the most common thing to do in any modern web application. When it comes to talking with an API then most of the time we need to do a lot of repetitive things like getting data from an API call, handling the success or error case, and so on.

When calling tens of hundreds of API calls we always have to do those tedious tasks. We can handle those things efficiently by putting a higher level of abstraction over those barebone API calls, whereas in some small applications, sometimes we don’t even care.

The problem comes when we start adding new features on top of the existing features without handling the API calls in an efficient and reusable manner. In that case for all of those API calls related repetitions, we end up with a lot of repetitive code across the whole application.

In React, we have different approaches for calling an API. Nowadays mostly we use React hooks. With React hooks, it’s possible to handle API calls in a very clean and consistent way throughout the application in spite of whatever the application size is. So let’s see how we can make a clean and reusable API calling layer using React hooks for a simple web application.

I’m using a code sandbox for this blog which you can get here.

import "./styles.css";
import React, { useEffect, useState } from "react";
import axios from "axios";

export default function App() {
  const [posts, setPosts] = useState(null);
  const [error, setError] = useState("");
  const [loading, setLoading] = useState(false);

  useEffect(() => {
    handlePosts();
  }, []);

  const handlePosts = async () => {
    setLoading(true);
    try {
      const result = await axios.get(
        "https://jsonplaceholder.typicode.com/posts"
      );
      setPosts(result.data);
    } catch (err) {
      setError(err.message || "Unexpected Error!");
    } finally {
      setLoading(false);
    }
  };

  return (
    <div className="App">
      <div>
        <h1>Posts</h1>
        {loading && <p>Posts are loading!</p>}
        {error && <p>{error}</p>}
        <ul>
          {posts?.map((post) => (
            <li key={post.id}>{post.title}</li>
          ))}
        </ul>
      </div>
    </div>
  );
}

I know the example above isn’t the best code but at least it’s working and it’s valid code. I will try to improve that later. For now, we can just focus on the bare minimum things for calling an API.

Here, you can try to get posts data from JsonPlaceholer. Those are the most common steps we follow for calling an API like requesting data, handling loading, success, and error cases.

If we try to call another API from the same component then how that would gonna look? Let’s see.

500: Internal Server Error

Now it’s going insane! For calling two simple APIs we’ve done a lot of duplication. On a top-level view, the component is doing nothing but just making two GET requests and handling the success and error cases. For each request, it’s maintaining three states which will periodically increase later if we’ve more calls.

Let’s refactor to make the code more reusable with fewer repetitions.

Step 1: Create a Hook for the Redundant API Request Codes

Most of the repetitions we have done so far are about requesting data, handing the async things, handling errors, success, and loading states. How about encapsulating those things inside a hook?

The only unique things we are doing inside handleComments and handlePosts are calling different endpoints. The rest of the things are pretty much the same. So we can create a hook that will handle the redundant works for us and from outside we’ll let it know which API to call.

500: Internal Server Error

Here, this request function is identical to what we were doing on the handlePosts and handleComments. The only difference is, it’s calling an async function apiFunc which we will provide as a parameter with this hook. This apiFunc is the only independent thing among any of the API calls we need.

With hooks in action, let’s change our old codes in App component, like this:

500: Internal Server Error

How about the current code? Isn’t it beautiful without any repetitions and duplicate API call handling things?

Let’s continue our journey from the current code. We can make App component more elegant. Now it knows a lot of details about the underlying library for the API call. It shouldn’t know that. So, here’s the next step…

Step 2: One Component Should Take Just One Responsibility

Our App component knows too much about the API calling mechanism. Its responsibility should just request the data. How the data will be requested under the hood, it shouldn’t care about that.

We will extract the API client-related codes from the App component. Also, we will group all the API request-related codes based on the API resource. Now, this is our API client:

import axios from "axios";

const apiClient = axios.create({
  // Later read this URL from an environment variable
  baseURL: "https://jsonplaceholder.typicode.com"
});

export default apiClient;

All API calls for comments resource will be in the following file:

import client from "./client";

const getComments = () => client.get("/comments");

export default {
  getComments
};

All API calls for posts resource are placed in the following file:

import client from "./client";

const getPosts = () => client.get("/posts");

export default {
  getPosts
};

Finally, the App component looks like the following:

import "./styles.css";
import React, { useEffect } from "react";
import commentsApi from "./api/comments";
import postsApi from "./api/posts";
import useApi from "./hooks/useApi";

export default function App() {
  const getPostsApi = useApi(postsApi.getPosts);
  const getCommentsApi = useApi(commentsApi.getComments);

  useEffect(() => {
    getPostsApi.request();
    getCommentsApi.request();
  }, []);

  return (
    <div className="App">
      {/* Post List */}
      <div>
        <h1>Posts</h1>
        {getPostsApi.loading && <p>Posts are loading!</p>}
        {getPostsApi.error && <p>{getPostsApi.error}</p>}
        <ul>
          {getPostsApi.data?.map((post) => (
            <li key={post.id}>{post.title}</li>
          ))}
        </ul>
      </div>
      {/* Comment List */}
      <div>
        <h1>Comments</h1>
        {getCommentsApi.loading && <p>Comments are loading!</p>}
        {getCommentsApi.error && <p>{getCommentsApi.error}</p>}
        <ul>
          {getCommentsApi.data?.map((comment) => (
            <li key={comment.id}>{comment.name}</li>
          ))}
        </ul>
      </div>
    </div>
  );
}

Now it doesn’t know anything about how the APIs get called. Tomorrow if we want to change the API calling library from axios to fetch or anything else, our App component code will not get affected. We can just change the codes form client.js This is the beauty of abstraction.

Apart from the abstraction of API calls, Appcomponent isn’t right the place to show the list of the posts and comments. It’s a high-level component. It shouldn’t handle such low-level data interpolation things.

So we should move this data display-related things to another low-level component. Here I placed those directly in the App component just for the demonstration purpose and not to distract with component composition-related things.

Final Thoughts

The React library gives the flexibility for using any kind of third-party library based on the application’s needs. As it doesn’t have any predefined architecture so different teams/developers adopted different approaches to developing applications with React. There’s nothing good or bad. We choose the development practice based on our needs/choices. One thing that is there beyond any choices is writing clean and maintainable codes.