“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.”
“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.“