21 May

“Ethereum core developer Preston Van Loon told a panel at the Permissionless conference today that there’s momentum behind finalizing the move in the next three months. Ethereum Foundation Justin Drake, also on the panel, noted there’s a ‘strong desire to make this happen before [the] difficulty bomb in August.

If everything goes to plan, August—it just makes sense.”

See Also: Binance Adds Support for Layer-2 Ethereum Scaling Solution Optimism

“OpenSea has announced the launch of a Web3 marketplace protocol for ‘safely and efficiently buying and selling NFTs.

The marketplace protocol, dubbed Seaport, will give users the option to obtain NFTs by offering assets other than just payment tokens like Ether (ETH). According to the platform, a user ‘can agree to supply a number of ETH / ERC20 / ERC721 / ERC1155 items‘ in exchange for an NFT, implying bartering a combination of tokens as a method of payment.

OpenSea does not control or operate the Seaport protocol — we will be just one, among many, building on top of this shared protocol.”

Investors have largely exited the Terra ecosystem – now evident in DeFi protocols on the blockchain – and analysts remain skeptical about its long-term prospects.

Data from trackers show funds held in decentralized finance (DeFi) applications built on Terra have slumped to $155 million in locked value as of Friday morning. Locked value on Terra DeFi peaked at $30 billion in early April.

Experiencing significant losses, or seeing others take significant losses – at no fault of their own – is probably one of the fastest ways for a protocol or blockchain in this space to lose the trust of the community.”

See Also: Terra’s amended revival plan would decrease the allocation for post-attack UST holders
See Also: Could Terra’s Do Kwon Go to Prison?

“The CEO of crypto lending and staking platform Celsius Alex Mashinsky believes “the Sharks of Wall Street” can smell blood in the water and are causing instability at several crypto projects.

Mashinsky attributes recent Celsius (CEL) price falls, the brief Tether (USDT) depegging and collapse of Terra (LUNA) — at least in part — to short sellers on Wall Street. CEL has fallen from its all-time high of $8.05 to $0.82, which is a 90% drop.

This is not a coincidence. This is somebody who decided, ‘You know what? I’m going to take down all of Celsius. They took down Luna. They tried Tether, Maker and many other companies. It’s not just us. I don’t think they have a specific hate or focus on Celsius. They are all looking for any weakness to short and destroy.

The point is that the Sharks of Wall Street are now swimming in crypto waters.”

See Also: Amid crypto carnage, Goldman and Barclays fill their bags
See Also: Coinbase Co-Founder Fred Ehrsam Buys the Dip, Purchases $75M of Company Stock
See Also: 20% drop in the S&P 500 puts stocks in a bear market, Bitcoin and altcoins follow

“The annual meeting of the World Economic Forum (WEF) is scheduled to take place from May 22–26, marking the first in-person WEF global leadership event since the pandemic began. At the Davos blockchain event, individuals will be able to gather, learn, discuss and demonstrate how blockchain is a crucial driver of the Fourth Industrial Revolution.

Blockchain and digitization and their subsequent impact on various global sectors will be featured topics during the annual meeting, with discussions ranging from the emerging role of the decentralized finance market to how blockchain can be applied to eradicating world poverty.

Crypto industry leaders like Sam Bankman-Fried will present the environmental sustainability goals of Bitcoin to world leaders. The role of decentralized finance in the future of governance will be another key event to watch out for. The session will see discussions around the need for centralization in the decision-making process and whether DeFi protocols can do without regulation.”

20 May

“The Chicago outpost of Sam Bankman-Fried’s trading empire said it will begin testing stock trading functionality for a handful of U.S. users on Thursday. The launch comes as FTX makes an aggressive push into the traditional financial ecosystem.

Our goal is to offer a holistic investing service for our customers across all asset classes.

The exchange also plans to let its customers fund their accounts in the stablecoin USDC. This effectively means that the same go-between asset for crypto traders can enter the stock market.”

Tether reduced its commercial paper holdings by 17% from $24.2 billion to $20.1 billion in the first quarter, according to its latest attestation report. The reduction in commercial paper has continued with a further 20% cut since April 1, which will be reflected in the second-quarter report, Tether announced Thursday.

The majority of this $20.1 billion (around $18 billion) is comprised of A-1 and A-2 paper, which qualify as investment grade. The geographic location of the commercial paper issuers was also not found in the report.”

Sellers using the Crypto.com Pay feature can allow customers to settle their accounts with over 20 tokens. Shopify merchants also have access to Jack Mallers’ Strike, Coinbase Commerce and BitPay.

Our growing blockchain ecosystem demonstrates our commitment to supporting merchants with alternative payment methods on their storefronts, helping to further expand what’s possible in commerce.”

“If the proposal is passed, CRV emissions from all pools involving UST would be ended, effectively ending all incentives for anyone to provide their UST to Curve. And the consensus seems to agree as 100% of all voters have voted to end CRV emissions from UST-related pools at writing time.

Due to the current circumstances, i.e., UST trading 90% off-peg and Terra ecosystem having approx. $9B in bad debts, there is currently no prospect of a sustainable recovery of the peg.

The proposal further pointed out that Curve pools involving UST could act as a way for opportunistic investors to attract exit liquidity for their failed investments.”

See Also: South Korean watchdog reportedly fines Terraform Labs $78M for tax evasion
See Also: Avalanche Plummets Double-Digits as Crypto Meltdown Continues

“In light of the recent turmoil in the crypto-asset market, the G7 urges the FSB (Financial Stability Board) … to advance the swift development and implementation of consistent and comprehensive regulation.

The FSB, an international body based in Basel that was responsible for generating many of the post-2008 financial norms, had previously promised a report on the regulation, supervision and oversight of global stablecoins for October of this year.

The FSB’s leader, Klaas Knot, has already volunteered to write a crypto rulebook that could cover financial stability and investor protection issues.”

See Also: US Appeals Court Orders SEC to Bring Enforcement Actions to Jury Trials
See Also: Commerce Dept. Asks for Public Comments on Framework for US Crypto Competitiveness

19 May

“Lens Protocol opened on the Polygon blockchain mainnet Wednesday. Built by Aave Companies, it allows developers to build their own decentralized social media networks in which users fully own their data. Today people can starting minting their profiles, an Aave spokesperson said, noting about 50 apps are already built on Lens.

Aave’s Lens differs in its focus on non-fungible tokens (NFTs): each creator gets their own. These “profile” NFTs link to their followers and communities and interact with the 50+ platforms available at launch.

Web 3 social ensures that users are in control of their content which makes the applications and algorithms compete on bringing the best experience layer to the users.

Aave has additionally launched a $250,000 grants program to fund projects seeking to build decentralized applications (dapps) on Lens.”

See Also: Elon Musk Wants Twitter to Be WeChat-Style ‘Super App’ With Payments

“Ethereum developers have reached another milestone on their way to the long-awaited ETH 2.0 network upgrade—the Ropsten public testnet will undergo an upgrade to proof-of-stake consensus on June 8.

As it prepares for upgrading the mainnet, the Ethereum Foundation has bumped up rewards on offer from its bug bounty program, launched in 2021. The max Ethereum bounty for reporting vulnerabilities in upgrades that are already live on public testnets or scheduled to be released on the Ethereum mainnet are doubled at the moment, bringing the ceiling to $500,000.”

The five applications suggest the social media firm may use its namesake in a payments processing platform called Meta Pay.

The filings included Meta’s name for use in a online social networking service for investors allowing financial trades and exchange of digital currency, virtual currency, cryptocurrency, digital and blockchain assets, digitized assets, digital tokens, crypto tokens and utility tokens.”

See Also: Two credit card firms in Israel to let cardholders buy Bitcoin

U.S. President Joe Biden’s administration will press Congress to demand cryptocurrency exchanges keep their customers’ money separate from their own corporate funds. Federal officials will push in the coming weeks to put the change into any crypto bill considered by Congress.

Spurred by Coinbase’s (COIN) recent disclosure that customers’ money would be jammed up if the company declared bankruptcy, federal officials intend to push U.S. lawmakers to fix the problem by insisting that a future legal framework require crypto firms keep customer assets walled off. That type of custodial rule is standard for financial firms such as futures platforms, but crypto exchanges routinely mingle their funds with customers’ holdings in the same pot.

But not everybody sees fencing off customers’ money as the best answer.

Legislators should work on a Digital Asset Investor Protection Act that mirrors the Securities Investor Protection Act. It could give investors primary status in bankruptcy proceedings, and it could also set up a backstop fund to cover losses like the one securities investors have.”

See Also: SEC Chair Gensler Threatens Action Against Unregistered Crypto Exchanges, Again

“The Coinbase Institute, which was announced on Tuesday, will ‘cut across many disciplines and provide expert analysis and insights about what’s happening in the global crypto economy.’ A key priority for the institute will be the dissemination of empirical and peer-reviewed research. This will include an academic partnership with the University of Michigan to measure household adoption and attitudes toward cryptocurrency.

Coinbase’s launch of a “think tank” is consistent with the mentality of CEO Brian Armstrong, who has often expressed frustration with media accounts of the crypto industry he views as wrong or uninformed.

The Coinbase Institute has already issued its first report, titled “Crypto and the Climate,” which makes the case that the industry’s high energy use is often justified, and claims that it contributes to new forms of energy efficiency and longterm sustainability.”

See Also: Crypto giants co-launch Chainabuse platform to water down rising scams

“Terra governance prop #1623 to rename the existing network Terra Classic, LUNA Classic ($LUNC), and rebirth a new Terra blockchain & LUNA ($LUNA) is now live.

As per the proposal, the new chain would entirely cut out the failed UST product and instead focus on decentralized finance (DeFi) applications building on Terra. The current chain would continue as Terra “Classic,” while holders of LUNA on the “Classic” chain would receive a token airdrop of the new chain’s token under the plan.

At writing time, some 64% of voters on the on-chain proposal supported the fork, while 34% voted against it. The community, however, is apparently not on board. Some 92% of over 6,220 voters on a previously held online poll have voted against the change, with the most popular responses calling for “no fork.” Most comments on the proposal’s discussion are negative. Some even term it “anti-community,” while others urged legal intervention.

The primary challenge the Terra community has against a new fork as proposed by Do Kwon is trust. Anything incoming from Luna’s team may be treated in the same way as the lack of trust prevails. It’s rather a speculative asset now than a representation of a tier 1 ecosystem. The chances of a consensus are very low.”

See Also: Mike Novogratz Ends Twitter Silence, Shares Take on UST/LUNA Crash

“Bitcoin dipped to under $30,000 in European trading hours on Wednesday amid a retreat across traditional markets, as traders and analysts assessed the potential economic ramifications of U.S. Federal Reserve Chairman Jerome Powell’s pledge Tuesday to keep tightening pressure on financial conditions until inflation shows signs of weakening.

What we need to see is inflation coming down in a clear and convincing way and we’re going to keep pushing until we see that.

In traditional markets, U.S. stocks were poised for declines on Wednesday based on the direction of futures trading, with weakness appearing as a disappointing earnings report from Target sent the giant retailer’s shares plunging more than 22%. Inflation is forcing consumers to spend more on food and less on discretionary items.”

Asia-based genomics firm Genetica and Web3 data management firm Oasis Labs have partnered to tokenize genomics profiles with the aim to enhance genomics-based precision medicine. The partnership is also backed by Vietnamese government officials who are very supportive of Web3 technologies and data rights.

Genetica will migrate 100,000 genomic data profiles to the Oasis Network. These profiles will allow the data owners to have full control and knowledge of how their genetic data is being used.

The partnership enables us to turn the idea of issuing GeneNFTs to our users a reality.”

May 18

As host of an annual meeting of the Alliance for Financial Inclusion (AFI), El Salvador President Nayib Bukele is promoting the use and adoption of bitcoin to 32 central banks and 12 financial officials representing emerging economies.

The event, which takes place between Monday and Wednesday, covers topics such as financial inclusion and the digital economy, Bukele said, as well as the benefits El Salvador has obtained from becoming the first country in the world to adopt bitcoin as legal tender last year.

Among the countries attending are Paraguay, Haiti, Honduras, Costa Rica and Ecuador in Latin America; Angola, Ghana, Namibia and Uganda in Africa; and Bangladesh, Palestine and Pakistan in Asia.

El Salvador, which joined the AFI network in 2012, has made significant progress in harnessing digital financial services to advance financial inclusion for individuals and small businesses.”

“The EY OpsChain Supply Chain Manager, which is now available in a beta version, is the first joint project between Ernst & Young and Ethereum scaling tool Polygon.

The project is aimed at tackling chokepoints along supply chains combining product traceability with inventory management. Organizations would create tokens to represent assets and inventory, which the OpsChain manager would then track across the supply chain network.

Polygon Nightfall, the network combining the fruits of the two entities’ labor, offers zero-knowledge proof-based privacy technology, guaranteeing that only selected parties can see the full history of the assets tracked.

Enterprise use cases outside of financial services are still not widely developed. Privacy tools open a whole new world for us.”

See Also: Ledger Adding Browser Extension to Connect Hardware Wallets to Web 3 Apps
See Also: Coinbase Expands Features, Allowing Some App Users to Access Ethereum-Based Dapps
See Also: Fireblocks Deploys ‘Web3 Engine’ for Firms Eyeing GameFi, NFTs

“S&P Global’s (SPGI) ratings division has created a decentralized finance (DeFi) strategy group to help build the company’s decentralized market framework for investors. The team seeks to build out S&P’s analytics and risk assessment capabilities for both traditional finance and DeFi clients.”

See Also: Global financial regulators will discuss crypto at G7: Report

“The Congressional Research Service (CRS), a legislative agency that supports the United States Congress, has published a document that contains a rundown on algorithmic stablecoins and points out key factors to look at in the TerraUSD (UST) crash.

The CRS described the TerraUSD crash as a “run-like” scenario where holders started to doubt the reserves that back the dollar peg. The research agency further explained that run-like scenarios in traditional finance are guarded by regulation and other measures such as bank deposit insurance and liquidity facilities.”

See Also: Do Kwon summoned to Korean parliamentary hearing following UST and LUNA crash

“It’s not possible to make direct purchases, but after reading about the NFT and seeing an enlarged preview, the user can tap to be redirected to the OpenSea page where they can purchase the item.

The tests are being conducted in an effort to improve artist and fan experiences.

Musicians are actively exploring the NFT market, which could be a vital source of revenue. In 2021, Linkin Park’s Mike Shinoda became the first major-label artist to release a single as an NFT, and the Kings of Leon were the first band to release a whole album in the form of nonfungible tokens. Aoki, according to an estimate from Rolling Stone, made close to $3 million from minting just two NFT pieces out of the 11-piece collection.”

See Also: ApeCoin Migration Draws Interest From Avalanche, Flow

“China is once again contributing a significant chunk of the world’s bitcoin (BTC) mining operations despite the ban last year. From September 2021 to January of this year, China’s contribution to the bitcoin mining network was second only to that of the U.S.

Following the crackdown on bitcoin mining in the country last year, China’s share was reduced to 0% in July and August. However, the CCAF’s latest data show that the figure was up to 22.29% in September and fluctuated around 20% in October-January.

This suggests that underground mining activity has been underway in China.

Access to off-grid electricity and geographically scattered small-scale operations are among the major means used by underground miners to hide their operations from authorities and circumvent the ban.”

“Internet security company Cloudflare has announced it will run and fully stake several Ethereum validator nodes in the coming months. Cloudflare is committed to playing a small role in the transition to Ethereum 2.0.

Cloudflare says its Ethereum validator nodes ‘will serve as a testing ground for research on energy efficiency, consistency management, and network speed.’ Cloudflare was founded in 2010 to help businesses fortify and speed up their websites. The company’s mission is to build a ‘better internet.'”

“Despite being publicly endorsed by the respective mayors of both cities, MiamiCoin (MIA) and NewYorkCityCoin (NYC) have plunged 90% and 80% since their all-time highs. The assets were developed by the CityCoins project, a Stacks layer-on blockchain-based protocol aiming to provide crypto fundraising avenues for local governments.

Miami mayor Frances Suarez has spoken about the potential use cases of MIA on multiple occasions and most recently announced in February that the local government had disbursed $5.25 million from its reserve wallet to support a rental assistance program.

While the governments have benefited from the partnerships, the user/investor side of things appears to share mining rewards, and a supposed 9% annual BTC yield from “stacking” (essentially staking) the assets on the Stacks blockchain is not enticing enough to drive strong demand.

People will stop mining the coin if they can’t make money off of it.”

17 May

“Her Majesty’s Treasury has reportedly decided to go ahead with regulating stablecoins as legal tender.

Economic Secretary JohnGlenUK announced today that stablecoins will be brought into UK payments regulation. This places the UK financial services sector at the forefront of technology, creating conditions for stablecoin issuers and service providers to operate and invest.

While the recent crash of the Terra ecosystem — which saw an unrecoverable downfall of LUNA and UST — was expected to raise red flags among the regulators, the U.K. Treasury maintains its course ‘to ensure the U.K. financial services industry is always at the forefront of technology and innovation.’

However, the Treasury’s plan does not involve legalizing algorithmic stablecoins and instead prefers 1:1 fully-backed stablecoins.”

See Also: UK Court recognizes NFTs as ‘private property’ — What now?
See Also: German Regulator Calls for New DeFi Laws
See Also: ECB’s Panetta: Digital Euro Could Come Out Within 4 Years

“B3, the Brazilian Stock Exchange, confirmed that within six months it intends to launch its first official product aimed at the cryptocurrency market — Bitcoin (BTC) futures trading. In addition to BTC and ETH futures, B3 also intends to offer services to national cryptocurrency exchanges and to be a kind of “centralizer” of custody and settlement operations.

We are identifying points of friction that we can help resolve to face up, such as helping our customers provide the best access to their end customers.

Currently, in Brazil, institutional and retail investors can trade 11 ETFs through B3 with exposure to cryptocurrencies. In addition, there are more than 25 investment funds approved by the Securities and Exchange Commission (CVM) that offer different types of exposure to the crypto-assets market.”

See Also: Grayscale Investments to List Its First ETF in Europe
See Also: Oasis Pro Raises $27M for Crypto Securities Trading Platform

“LFG notes that it has almost entirely depleted its BTC reserves from around 80,000 bitcoins to 313. The remaining assets [roughly $80M], which mostly comprise the crashed UST and LUNA tokens, will apparently be used to compensate investors.

LFG denied accusations that it bailed out whales with the bitcoin trove: ‘there was never any deal for ‘insiders’ to exit. LFG funds were merely used squarely within its mandate to help protect UST peg.‘ LFG said it sold off most of the BTC in its reserves for UST as Terra’s ecosystem was beginning to collapse early last week.

Monday’s statement from LFG comes amid criticism that Terra’s reserve funds, which were supposed to belong to the “decentralized” Terra community, were handled with a lack of transparency by Terra’s centralized leaders and investors.

UST’s price plummeted further in response to Monday’s announcement – from 15 cents to 7 cents.”

See Also: What Happened to the $3.5B Terra Reserve?

See Also: Kwon Proposes Forking Terra, Nixing UST Stablecoin in ‘Revival Plan 2’
See Also: CZ: “This won’t work.”

“Portuguese Minister of Finance Fernando Medina said cryptocurrencies will be subject to taxation in the near future, according to comments in the nation’s parliament on Friday. While she confirmed the new policy will include a capital gains tax, the government has not yet explained how staking or yield farming might be affected.

The government has said that [it] will move forward with the taxation of crypto.

Portugal was previously considered a tax haven for cryptocurrency investors, in part due to an effective capital gains rate of zero.”

See Also: Nigeria’s SEC Affirms All Digital Assets Are Securities in New Rulebook
See Also: Indian Central Bank Says Cryptos Could Lead to ‘Dollarization’ of Economy: Report

“Bitcoin (BTC) has had seven straight weeks of losses for the time first in its history amid a downturn in broader markets, stricter crypto regulations, waning retail interest and systemic risks in the crypto sector, data shows.

Adding to the downside is the bleak outlook for U.S. monetary policy, where no light at the end of the tunnel with rate hikes can be seen yet.

In April, Goldman Sachs analysts said in a note that the Fed’s aggressive measures to control inflation could result in a recession. The investment bank put the odds of an economic contraction – a phase of the business cycle in which the economy as a whole is in decline – at about 35% over the next two years.

Former Goldman Sachs CEO Lloyd Blankfein reiterated that sentiment over the weekend, stating the U.S. economy was at a “very, very high risk.” Such an environment could cause a drawdown in U.S. equities, which may spread to bitcoin and cause further sell-offs in the coming weeks if the current correlation continues.

See Also: Analysts flag Bitcoin price levels to watch after LFG sells 80K BTC

“The joint U.S.-EU Trade and Technology Council will collaborate on the research and development of technology to track carbon emissions, and will look at blockchain technology as a potential tool for measuring and utilizing lifecycle greenhouse gas (GHG) assessments.

The working group will examine the potential of several “emerging technologies,” including blockchain technology, to track emissions more reliably.”

14 May

“We are in the midst of the biggest collapse in crypto’s history.

UST, the third-largest stablecoin (largest not issued by a centralized entity) has de-pegged, trading at $0.35 at the time of writing. Its seigniorage token, LUNA, has collapsed in value, falling 99.9% from its all-time high, eviscerating more than $41 billion in value in one of the largest, single-asset wealth destruction events in history.

Although events have yet to fully play out, the far-reaching consequences of Terra’s collapse cannot be understated. For starters, it is yet another example of the importance of true decentralization. UST claimed to be meeting this need – But in practice it was highly centralized. The system required an incredible amount of human intervention and back-room, closed-door deals in order to function properly.

Let’s unpack the collapse of UST to see how the system broke down, and what the broader implications of its failure may be.”

The Terra network has already lost most of its financial capital. Now, it must work fast to preserve its human capital. Plenty of projects are building on the Terra network. But there are also other blockchains that are signaling an openness to absorb such teams into their own networks.

In the “ecosystem revival plan,” Kwon suggests that UST is not coming back—and the Terra blockchain must redistribute tokens to move forward.

The holders of Luna have so severely been liquidated and diluted that we will lack the ecosystem to build back up from the ashes.

To “preserve the community and the developer ecosystem,” Kwon proposes resetting the distribution of the network’s LUNA governance tokens to 1 billion, 40% of which would be redistributed to holders before Terra’s UST stablecoin became de-pegged from the U.S. dollar over the weekend.

Another 40% will go to those who hold UST at the time of the upgrade. A further 10% would go to LUNA holders when the blockchain was halted today for a second time in 24 hours. The remaining 10% would be used to pay for future development on the network.”

See Also: Terra Validators Halt Blockchain for Second Time to Plot Next Steps

“As the collapse of Terra’s LUNA and UST tokens has sent shock waves throughout the industry, accelerating the decline of the price of bitcoin, knocking tether off its peg and reiterating concerns from institutions and regulators about the viability of the asset class, crypto lending appears to be its next victim. Data now suggests that there’s a cavalcade of people looking for an exit.

The total locked-in value for DeFi is at $150 billion, down from $230 billion a month ago. Data would suggest that many traders are moving their crypto out of DeFi protocols and into stablecoins like USDC with plans to redeem them.

Lending protocol prices aren’t taking well to this dash for the exit. Across the board, the tokens of major lending protocols are down with aave falling 53% over the past week. Celsius has dropped 55.6% over the past week and compound has fallen 49% during that time.

The good news from this crisis is that many parts of the infrastructure surrounding crypto are continuing to hold.”

See Also: Maker DeFi Token Jumps 30% as Users Turn to DAI Stablecoin Amid Terra’s Collapse
See Also: ‘Stable in Name Only’: Stablecoin Issuers Speak Out as UST Craters

Raoul Pal: Where is the bottom?

See Also: Bitcoin Holds $30K After Turbulent Week
See Also: Bitcoin price sees ‘hell of a reversal candle’ as 168,000 BTC leaves exchanges

“Yellen said that ‘the government’s role should be to ensure responsible innovation – innovation that works for all Americans, protects our national security interests and our planet, and contributes to our economic competitiveness and growth.

The American Blockchain PAC that I lead as CEO welcomed Secretary Yellen’s sound guidelines for a process of developing a legal and regulatory structure to protect the public while creating a climate that fosters innovation.

The “Thompson principles” offer a framework for digital commodities exchanges, voluntary registration and qualified digital commodity custodians. They also offer an improved process to create digital commodities; to provide a full accounting of stablecoin assets and liabilities; to protect customers using stablecoins and register asset-backed digital commodity users.

Congress and the financial services industry finally grasp that cryptocurrency is not just another extraordinary, popular delusion or the result of the madness of crowds. The blockchain (from which cryptocurrencies are fashioned) is fundamental to many important emerging technologies like non-fungible tokens, Web 3, and the metaverse.

See Also: ECB lays out ‘anonymous’ digital euro as public opposes ‘slavecoins’

Legal Risks in a Web3 World

13 May

“Treasury Secretary Janet Yellen told members of Congress on Thursday that she doesn’t believe the crypto market has grown to a scale that it poses a “systemic risk”—a designation that can trigger a raft of new regulatory measures.

I can’t say [stablecoins] have reached a scale where they’re financial stability concerns.

The Treasury Secretary, in response to a question from Rep. Himes, also stated she was aware of the distinction between algorithmic stablecoins like UST (which rely on financial incentives to preserve their peg to the dollar) and other stablecoins that are backed by a reserve of dollars.

Following the 2008 crisis, Congress introduced legislation that recognized certain large financial entities—including banks and insurer AIG—as posing a “systemic risk” to the U.S. economy, and imposed a series of oversights, including higher capital reserves, on their business operations.”

See Also: Global Crypto Regulatory Body Is Coming Soon, Says Top Official

LUNA currently sits at a price of just over $0.01 per coin, a precipitous fall from a price point of over $81 just one week ago. That’s a 99.99% fall. Given how dramatically the price of the LUNA governance token has fallen, the blockchain network rapidly became much more susceptible to attackers.

Validators decided to halt the Terra chain to prevent governance attacks following severe $LUNA inflation and a significantly reduced cost of attack.

Terra developers announced roughly an hour and half later that the blockchain had resumed block production, albeit with staking on the network disabled.

Earlier today, Terraform Labs—the creators of LUNA and UST—unveiled a series of steps aimed at salvaging the Terra ecosystem. Terraform Labs said that it would burn (or effectively destroy) any remaining UST in the community pool, as well as burn any UST that is running on Ethereum, and stake $240 million worth of LUNA to avoid potential governance attacks.

Crypto industry observers and insiders offered widely negative takes on the announcement.

Their plan is to let hyperinflation of Luna dissolve the bad UST debt, but the chain security of Luna goes down as hyperinflation reduces its price. It’s the 89th minute, they are losing 432-0 and have run off with the ball.”

See Also: Terraform Labs Launches 3 Emergency Actions to Save LUNA, UST Stablecoin
See Also: Citadel Securities, BlackRock, Gemini Slam Social Media Accusations of Involvement With UST Collapse
See Also: Binance will delist LUNA/USDT contracts as price falls below 0.005

“Tether (USDT), the world’s largest stablecoin, briefly dropped 5% on Thursday, falling as low as $0.95. The stablecoin has recovered some but is still trading at $0.98, according to data from CoinMarketCap. Paolo Ardoino, CTO of Tether and Bitfinex, explained that the volatility was “pure market dynamics.”

On Bitfinex the Tether peg is [greater than] $1 while on Kraken it is slightly lower than $1. This has resulted in arbitragers buying USDT cheap on Kraken and selling it on Bitfinex for profit. All this is pure market dynamics and has absolutely nothing to do with the value of Tether which continues to hold its peg.

USDT and UST are two different types of stablecoins. UST is an algorithmic stablecoin controlled by smart contracts, and USDT is backed by Tether’s reserves.

Bitcoin experienced a sharp decline toward $25,402 on Thursday. The cryptocurrency stabilized later in the New York trading day, but is still down by 20% over the past week. The underperformance of ETH relative to BTC typically signals risk-off conditions.

Wild price swings have been the norm over the past few months, which left many alternative cryptos (altcoins) vulnerable to extreme selling pressure. Solana’s SOL token is down by 46% over the past week, compared with a 30% decline in ether (ETH) over the same period.

Meanwhile, on Thursday, the price of the Terra blockchain’s token LUNA plunged below 2 cents. The sharp price move made the network vulnerable to governance attacks, which triggered a brief shutdown of the blockchain, which meant no transactions with the algorithmic stablecoin UST, LUNA or Terra’s other cryptocurrencies could be processed.”

XP (XP), the largest Brazilian brokerage by market value, plans to launch a crypto trading platform by the end of June. XP’s new feature will allow 3,5 million users to buy and sell bitcoin (BTC) and ether (ETH).

XP is listed on the Nasdaq and has a market cap of $10.8 billion. The company offers financial advisory services and more than 800 investment products. On Wednesday, the largest Brazilian digital bank, Nubank, added the option for customers to buy and sell bitcoin and ether on its platform.”

“Blue Studios said Thursday it is launching Wallio, a non-custodial family crypto wallet. The goal of the shared wallet is to promote “multigenerational diversity” through a product that comes with tools to educate children and grandparents alike.

Families who sign up for Wallio ahead of its third quarter launch will be able to create a shared crypto wallet to deposit and receive digital assets. One family member will set up a profile and can add up to six additional accounts for the other family members. Carter said the tie up with Unstoppable Domains lets family members create individual addresses with a name rather than a sequence of numbers.

Blue Studios will implement its play-to-earn and learn-to-earn technologies, where families can play games and complete modules to earn ether (ETH). The Family DAO will allow families to create a governance token for members to vote on measures pertaining to the wallet.

Bankless: UST Luna Collapse

12 May

“In what will surely be a historic week in stablecoin history, Terra’s LUNA, the currency that backs its dollar-pegged stablecoin UST, has slid beneath a dollar at the time of writing. No, we haven’t got our wires crossed. Terra’s LUNA – the formerly market-leading digital currency that was worth just over $119 in April – is trading at $0.85 at the time of writing.

It’s no ordinary crash, either. It’s in freefall. Earlier today, LUNA lost 32% of its value in the space of an hour. The news comes while Terra’s other flagship coin, UST, is trading under $0.40.

On Tuesday, a $1.5 billion loan from a Terra-centric non-profit organization called the Luna Foundation Guard (LFG) failed to buoy the stablecoin, which has since bottomed out at $0.30 this morning.

The event has been a catastrophic chapter in crypto history, and one that hasn’t been missed by regulators either.”

See Also: UST Falls to 35 Cents, Terra Futures See $106M in Liquidations
See Also: The LUNA and UST Crash Explained in 5 Charts
See Also: Crypto Twitter Reacts to UST Collapse and Market Meltdown
See Also: UST’s Do Kwon Was Behind Earlier Failed Stablecoin, Ex-Terra Colleagues Say

“The knock-on effect of the collapse of Terra (LUNA) and its TerraUSD (UST) stablecoin have spread wide across the cryptocurrency market on May 11 as projects with any kind of association with the DeFi ecosystem have seen their prices hammered.

The forced selling of the Bitcoin (BTC) holdings backing a portion of UST also influenced BTC’s current drop to $29,000 and analysts fear that DeFi platforms that have liquidity pools primarily comprised of UST and LUNA will collapse.

Projects with the direst of outlooks are those that are hosted on the Terra protocol including Anchor Protocol (ANC), Astroport (ASTRO) and Mars Protocol (MARS), which saw their token prices plummet more than 80% since May 4.

Assets in the Cosmos ecosystem were also hard hit by UST’s collapse. ATOM and other tokens like Mirror Protocol (MIR), Osmosis (OSMO) and Kava that utilize the Interblockchain Communication Protocol (IBC) corrected sharply due to their integration with Terra. The price declines for these assets was less extreme that those hosted on the Terra protocol, but their proxy to Terra has not protected them from contagion.

Maker (MKR) is the one bright spot to emerge in trading on May 11 as crypto traders now find themselves embracing Dai (DAI) as the “best” decentralized stablecoin option in the market. MKR price spiked 124% in trading on May 11, going from a low of $1,025 to an intraday high of $2,299.”

See Also: Cryptos Extend Losses as LUNA Plunges
See Also: Maker’s MKR Token Surges 30% and Stablecoin DAI Leapfrogs UST
See Also: ‘$DAI Will Die’ Tweet Twisted Back on Terra’s Kwon as UST Loses $1 Peg

“The European Commission is considering hard curbs on the ability of stablecoins to become widely used in place of fiat currency.

Under their plans, regulators could order the issuers of any stablecoin exceeding 200 million euros (US$211 million) and 1 million transactions daily to cease issuances until these figures come back below the threshold.

The European Parliament favors a softer approach that would see successful stablecoins reclassified and subject to oversight by the European Banking Authority.”

See Also: ‘Failure Should Be an Option,’ US Sen. Pat Toomey Says of UST Turmoil

“The price stabilization mechanism is absorbing UST supply. But the cost of absorbing so many stablecoins at the same time has stretched out the on-chain swap spread to 40%, and LUNA price has diminished dramatically absorbing the arbs.

The only path forward will be to absorb the stablecoin supply that wants to exit before $UST can start to repeg.

Terra endorsed the community proposal “1164,” which proposes increasing the minting capacity of Terra’s LUNA from $293 million to over $1.2 billion. That means additional LUNA would be minted and sold in the market to try to bring UST’s peg back to $1. That is in addition to a separate proposal that aims to offer lower yield to users of Anchor.

See Also: Anchor Community Submits Proposal to Restore UST Peg
See Also: UST’s Bitcoin Reserve Too Late in Coming to Save Dollar Peg

“Following a productive meeting, we remain encouraged by our ongoing engagement with the SEC. At Grayscale, we intend to maintain an open dialogue with regulators and policymakers as we look ahead to July 6.

In a presentation made to the SEC at the recent meeting, Grayscale said converting its marquee product into an ETF would ‘protect investors and the public interest, allowing the product to better track net asset value while giving investors the freedom to invest in Bitcoin in a safe and secure manner.’ Additionally, said Grayscale, an ETF vehicle instead of the current trust structure would ‘allow better NAV tracking, reduce discounts and premiums, and unlock approximately $8B for investors.’

Additionally, asset manager Bitwise has a spot bitcoin ETF application pending review with the SEC, with a final deadline of June 29.”

See Also: Germany Won’t Tax Bitcoin, Ethereum Sold After One Year of Possession
See Also: Chairmen from the SEC and CFTC talk crypto regulation at ISDA meeting

“U.S. inflation slowed last month for the first time since November 2020. The consumer price index (CPI) dropped to 8.3% in April from a year earlier, down from 8.5% in March. Economists had estimated an 8.1% rate for April.

But core inflation, which excludes seasonally volatile food and energy prices, rose 0.6% from March, double the rate from the prior month and higher than the 0.4% clip that economists had forecast.

Bitcoin (BTC) was down 4.8% within minutes after the report was released.”

“Nubank, the largest digital bank in Brazil and Latin America, announced that it has partnered with Paxos to allow the bank’s customers to buy, sell and store [bitcoin and ethereum] directly. Nubank [also] announced it will allocate roughly 1% of its net assets to Bitcoin (BTC). Nubank is said to have more than 50 million customers in Brazil alone.

There is no doubt that cryptocurrencies are a growing trend in Latin America. We have been following the market closely and we believe that there is transformational potential in the region.

Meanwhile, a securities filing earlier this year revealed that Warren Buffett’s Berkshire Hathaway had purchased $1 billion in Nubank shares in the fourth quarter of 2021. The move is said to have given the Oracle of Omaha indirect exposure to the digital asset market.”

Bancor 3 gives participants access to “Single-Sided Staking” with no risk of impermanent loss, and providing them with “Auto-Compounding” and “Dual Rewards.” Single-sided staking consists of earning yields on just one token provided by a user to a Bancor pool to maintain 100% exposure to that token.

Bancor has spent the past several years creating the equivalent of high-yield savings accounts for DeFi. Bancor 3 enables robust and resilient on-chain liquidity markets that drive healthy token economies.

Over 30 decentralized autonomous organizations (DAOs) use Bancor as a treasury management solution, including Polygon, UMA, Nexus Mutual and KeeperDAO.”

11 May

The Luna Foundation Guard (LFG), stewards of Terra’s UST stablecoin, are looking to raise over $1 billion. LFG will use the cash to help restore UST’s dollar peg. On Monday the algorithmic stablecoin fell as low as 60 cents amid broader crypto market turmoil. It has been around 90 cents on Tuesday.

Jump, Celsius, Jane Street and (perhaps) Alameda are reportedly in talks for a deal that will allow them to purchase LUNA, Terra’s token, at a 50% discount. The tokens would be subject to a one-year lockup and vest monthly in year two.

When UST fell as low as 60 cents on Monday, it sent shockwaves through the entire decentralized finance (DeFi) industry, even sparking comments from U.S. Treasury Secretary Janet Yellen on the risks of crypto stablecoin bank runs.

As UST cratered and the price of LUNA dropped nearly 50%, LFG deployed over $1.5 billion of its newly formed bitcoin (BTC) reserves to defend UST’s peg.”

See Also: UST Resumes Spiral After Quiet Day Orbiting 90 Cents
See Also: UST Stablecoin Veers Wildly From Dollar Peg
See Also: UST Woes Draw Spotlight in Janet Yellen’s Senate Hearing on Financial Risks
See Also: Binance Restarts LUNA and UST Withdrawals After Brief Suspension

After months of rising inflation, a fresh U.S. government report this week may finally show a deceleration in price increases. The U.S. Labor Department is scheduled to publish on Wednesday its Consumer Price Index (CPI) report for April.

Forecasters expect headline inflation to have climbed 8.1% year over year in April, which would be lower than the 8.5% reported for March. Traders [however] will be more closely watching “core” inflation, which is expected to have increased 0.4% from March, signaling higher inflation on a month-to-month basis.

It’s really the core inflation numbers that matter. Issues with rents may be showing up, and so the core CPI may not have peaked.”

See Also: Crypto Market Crash Leads to $1B in Liquidations
See Also: Dapper Labs Debuts $725M Ecosystem Fund for Flow Blockchain Development

“Lawmaker proposals to blacklist non-compliant firms are getting a rough ride as landmark MiCA legislation reaches its final stages.

A proposed European Union ban on crypto providers offering services from tax and money laundering havens raises “serious doubts” and could breach global trade rules, according to a European Commission document. ‘No such prohibition exists in other sectoral legislation,’ and it’s not clear why they should apply only to crypto, said the paper.

Such a prohibition … might create barriers to the provision of services in the EU and therefore might be seen as constituting a breach of international commitments taken at the World Trade Organization.”

“In Cuban’s view, the blockchain projects that purely “copy what everyone else has” by bridging over nonfungible tokens (NFTs) to decentralized finance (DeFi) protocols will die out eventually. Instead, he opined that smart contract platforms geared toward commercial usage and replacing software-as-a-service (SaaS) apps will thrive long term.

What we have not seen is the use of Smart Contracts to improve business productivity and profitability. That will have to be the next driver. When businesses can use Smart Contracts to gain a competitive advantage, they will. The chains that realize this will survive.”

See Also: Bitcoin Exchange Kraken Exploring Stocks as Part of ‘Super Wallet’: CEO Jesse Powell

A Fern Between Two Keys

10 May

TerraUSD (UST) has lost its dollar peg for the second time in three days, falling to as low as $0.90 on Monday. As UST has “depegged,” the price of LUNA, its sister token, has dropped 30% to $46 in the past 24 hours.

UST, a so-called algorithmic stablecoin, works with LUNA to maintain a price of $1 using a set of on-chain mint and burn mechanics. Luna’s price decline puts its market cap below that of UST’s. That potentially throws the foundation of UST’s entire mechanism into jeopardy, because it means a Terra bank run could lead to some users no longer being able to redeem their $1 of UST for $1 of LUNA.

Today’s depeg comes after the Luna Foundation Guard (LFG) announced Sunday night that $1.5 billion of its massive bitcoin reserves would be “loaned” out to professional market makers to proactively defend UST’s dollar peg. Currently, there is no concrete link between the LFG reserves and Terra’s on-chain mint and burn mechanism. Whether this will ever be possible has become even more unclear now that the reserves look to have been drained almost entirely.

Swan Bitcoin CEO Cory Klippsten called Terra a “confidence game” in response to the outsized influence of Terra’s founders and big-money backers in actively working to help the currency maintain its peg.”

See Also: Luna Foundation Guard Lends $1.5B in BTC and UST for Stablecoin Peg
See Also: Investors Flee Terra’s Anchor as UST Stablecoin Repeatedly Loses $1 Peg
See Also: New Fed Report Repeats Warning About Stablecoin Run Risks as UST Loses Peg

Selling pressure intensified in both cryptos and stocks on Monday as investors continue to reduce their exposure to speculative assets.

Bitcoin (BTC) dipped toward $30,000 for the first time since July of last year. Technical indicators show support between $27,000 and $30,000, which is the bottom of a year-long price range. Still, negative momentum on the daily, weekly and monthly charts means BTC is at risk of additional breakdowns, similar to what occurred during the 2018 crypto bear market.

Meanwhile, the S&P 500 reached new lows for the year as tech stocks continued to underperform. The bitcoin Fear & Greed Index is at the lowest point since January 24, which marked a temporary price low for bitcoin around $32,900. The index has remained in “extreme fear” territory over the past month as traders grappled with macroeconomic and geopolitical risks.

So far, El Salvador has bought the dip, which previously occurred around major price drops over the past year.”

See Also: Bitcoin retests key $30K support zone as data highlights BTC whale accumulation

The compatible third-party wallets will be MetaMask, Rainbow and TrustWallet. Instagram will initially support Ethereum-based NFTs, with integrations for the Polygon, Solana and Flow to be added at a later date.

We’re starting building for NFTs not just in our metaverse and Reality Labs work, but also across our family of apps. We’re going to bring similar functionality to Facebook soon.

The company says it’s also working on three-dimensional, augmented-reality NFTs with its Spark AR software, which will first be compatible with Instagram stories.”

“The arbiter of creditworthiness slapped Compound Treasury with a B- grade, meaning the USDC-powered yield platform ranks as “speculative” but ‘currently has the capacity to meet financial commitments. The outlook is stable.’

It appears to be the first time an “institutional DeFi” product has been scored by one of the major credit rating agencies.

[This] signals tremendous progress in the crypto industry’s maturity, as traditional institutions begin to judge the risks of digital asset powered financial offerings.

Launched in June 2021, Compound Treasury is designed to be appealing to crypto-savvy enterprises hunting for yield on their cash reserves. Accounts throw off 4% APR on deposits of the stablecoin USDC, are classified as securities and are offered only to accredited institutional customers.”

“Yield aggregators, vaults, lending markets, and native yield tokens were always implemented with slight variations. It was difficult to build apps on top of the vaults, and it created the potential for security vulnerabilities.

An Ethereum Improvement Proposal (EIP) created on December 22, led by Fei protocol founder Joey Santoro, set out to change that. Enter ERC-4626. EIP-4626 was approved on March 18. Since then, a large number of DeFi protocols—Yearn Finance, Balancer, Rari Capital, and mStable among them—started implementing ERC-4626 in their vaults.

All applications built on top of ERC-4626 vaults work with all other yield-bearing ERC-4626 vaults, so with these contracts now easy to integrate, new innovations sprung up around yield strategies.