Su Zhu

Directed trading and capital allocation at Three Arrows Capital that included substantial exposure to Terra ecosystem tokens and related yield strategies. The firm's leveraged positions and use of derivatives supplied both demand and short-term liquidity during the bull phase, and became sources of forced selling when markets turned, magnifying volatility. When Terra's UST peg destabilized and LUNA prices collapsed, the need to deleverage and liquidate positions by large funds like Three Arrows accelerated price drops and drained available liquidity in spot and derivative venues. Margin calls and counterparty unwind processes triggered cross-market contagion, turning concentrated positions into systemic sell pressure that materially impacted LUNA's realized market price. Public reporting and later insolvency proceedings tied Three Arrows to significant Terra exposure; those documented positions and the subsequent liquidation cascade serve as concrete examples of how principal traders and hedge funds can transmit and amplify market stress for a specific token through leveraged exposure and concentrated balance-sheet actions.