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.

7 May

“Although the short-term outlook for Bitcoin looks weak, one analyst and some evidence would suggest that Bitcoin is still on course to becoming a risk-off asset.

The fact that the world’s most fluid, 24/7 trading vehicle — Bitcoin — was down only about 15% in 2022 to May 3 vs. 20% for the Nasdaq 100 Stock Index may portend the crypto transitioning to a risk-off asset.

McGlone suggested that the transition of Bitcoin to become a risk-off asset ‘will propel it to $100K in 2022.’ However, with the worsening macroeconomic backdrop, popular YouTuber Benjamin Cowen said that Bitcoin may not hit $100,000 this year in the current “risk-off” environment–not ‘until inflation is under control.‘”

See Also: Inflation Will Create a Political Vacuum. Can Bitcoin Fill It?
See Also: US Jobs Report Shows Gain of 428,000, Adding to Price Pressures

The Google team will work on back-end services for developers creating Web3 applications. The idea is to make the company’s cloud platform the preferred choice among developers.

While the world is still early in its embrace of Web3, it is a market that is already demonstrating tremendous potential with many customers asking us to increase our support for Web3 and Crypto related technologies.”

See Also: Hop Protocol reveals details of Hop DAO and Optimism-style airdrop

“A decentralized autonomous organization (DAO) called TheCafeDAO opened a pop-up coffee stand in Seattle last weekend, a test run for what it hopes will be the first brick-and-mortar business run entirely through a DAO structure.

The DAO markets itself as “the cafe everyone owns,” with customers and employees being given “coffee tokens” that grant governance rights and discounts with each purchase.

What if we made a decentralized Starbucks?

The value of each token is $5, pegged to the price of a 12-ounce cup of coffee. Every time a coffee from the stand is purchased, a new token is minted.

A chunk of that token, roughly $3.50 worth, is then burned to account for operating costs. The remaining portion is then split among the customer, employees and DAO treasury. Token holders can either redeem their coins for fiat or hold them for governance rights, with one cup of coffee equaling one vote in whatever proposals are made by the DAOs members.”

“For Tesla (TSLA), it lasted just over three months before it decided to shutter the payment offering, citing environmental concerns. But the reality is, few people – if anyone – actually bought a Tesla with bitcoin because of the tax liability when liquidating the bitcoin and the administrative burden of new anti-money laundering filings required for any purchase of goods worth over $10,000.

It’s not surprising then that most of the retail payment volume for merchants comes from cheaper goods.

Luxury goods like Gucci products are an even easier way to launder money than real estate. So for Gucci, those who want to purchase goods worth over $10,000 will need to file paperwork reporting their purchase. Gucci’s compliance and risk analysis teams may have an even lower threshold for crypto transactions because of money-laundering concerns. This undoubtedly would create a friction point for consumers, and the more of these there are, the less attractive a payment method becomes.”

6 May

“Just one day after crypto and traditional markets soared on Federal Reserve Chairman Jerome Powell’s comment that the U.S. central bank wasn’t likely to raise interest rates by more than 50 basis points (0.5 percentage point) at coming meetings, the dynamics of financial markets quickly changed.

Bitcoin dropped more than 7% on Thursday to a 24-hour low of $36,640. That was the lowest price since Feb. 24 and marked the biggest one-day decline since March 4. The decline was in line with a broad fall in the prices of stocks and bonds.

Inflation at its fastest pace in four decades remains a nagging concern, and the Fed’s approach to tackle the issue is still hawkish at a time when doubts are growing whether the U.S. central bank can engineer a proverbial “soft landing” – cooling the economy just enough to ease inflationary pressures without causing an outright recession.

The yield on the 10-year U.S. Treasury pushed above 3%, its highest level since 2018, adding to the economic headwinds by increasing borrowing costs for everything from mortgages to corporate loans and commercial real estate.”

“The approval came as the firm used a different exchange act application, which also helped Teucrium get the green light for a similar product. Both companies filed under the so-called “33 Act.”

Spot bitcoin ETF applications are uniformly filed under the “33 Act,” and have been dismissed without exception by the SEC as being too risky for investors for various reasons. The approval of what is now two 33 Act bitcoin futures ETFs will raise industry hopes that a spot bitcoin ETF approval isn’t far behind.”

See Also: US House Panel to Weigh FTX Proposal on Clearing Customers’ Swaps Trades

The announcement on Thursday afternoon comes after the IMF last month approved a $45B loan facility for Argentina that stipulated the country would discourage the use of cryptocurrencies.

The BCRA statement says banks are prohibited from offering services for any digital assets not regulated by the central bank, and since there currently are no digital assets thus regulated, the move amounts to a de facto ban.

The announcement comes just days after Banco Galicia, the largest Argentinian private bank by market value, added the option to buy and sell cryptocurrencies on its platform. Also this week, domestic digital bank Brubank began offering similar services.”

See Also: NFT Issuers Could Have to Centralize and Register Under EU’s MiCA Rules, France Warns

“Binance committed $500 million and venture capital firm Sequoia Capital $800 million to help finance Elon Musk’s $44 billion takeover of social media platform Twitter (TWTR). Around $7.1 billion has been committed by 19 different parties.

Binance founder Changpeng “CZ” Zhao referred to the commitment as ‘a small contribution to the cause.Following Musk’s initial offer to buy Twitter last month, Zhao tweeted that Musk should ‘Privatize it, issue a token, decentralize it,’ adding that a priority should be to reduce spam and scams on the platform.”

See Also: Twitter’s Bluesky Releases First Code for Decentralized Social Media Network

“Brink’s (BCO), the company best known for moving valuables around in armored trucks, is bringing a physical security layer to the safekeeping of digital assets. Partnering with Swiss cryptocurrency custody firm Metaco, the 162-year-old firm is helping institutions prep for worst-case scenarios.

Institutions investing billions on behalf of clients can have backup master keys fragmented and stored on multiple smartcards, which can be reconstituted and loaded into an HSM to recover the private keys.

Brink’s has custody locations around the globe. So it was a very natural fit for the physical backup of private keys to be stored in a distributed way across multiple vaults by Brink’s.”

See Also: Typo Moves $36M in Seized JUNO Tokens to Wrong Wallet

The Steam-like platform makes it easier for new users to try play-to-earn games.

LootRush offers a quick-start platform for blockchain games, which typically have a more complicated on-boarding process than traditional video games. The blockchain-agnostic platform also offers non-fungible token (NFT) rentals for game play, which cuts the cost for a new gamer and earns yield for the NFT owner.

A friend of mine tried to play a crypto game last year, and it took him about three hours before he gave up even after spending $1,000 on NFTs. Bringing a lot more gamers into the space and making it mainstream requires making the experience very easy and fast.”

5 May

Under the order, the state will create a ‘transparent and consistent business environment‘ for blockchain-related companies, including crypto asset projects and those of related financial technologies.

California will also collect stakeholder feedback to create crypto asset regulations in conjunction with federal authorities, assess the use of blockchain technologies for state and public institutions, and create paths for blockchain-related research and work development programs.

California is a global hub of innovation, and we’re setting up the state for success with this emerging technology – spurring responsible innovation, protecting consumers and leveraging this technology for the public good.”

The Fairfax County Police Pension System’s chief investment officer Katherine Molnar said on Tuesday at the Milken Institute Global Conference that the system aims to fund two new crypto-focused hedge fund managers in the next three weeks. The next few days will see a decision made, which, if approved, would be the first time pension fund money was used in DeFi.

Molnar likened yield farming to a fixed-income replacement or an opportunity for a higher return than rate-sensitive assets.

Fairfax County is no stranger to the blockchain and cryptocurrency sector. In 2019, it began investing pension fund cash in cryptocurrencies, with projected returns of 9%. Fairfax’s crypto assets account for approximately 8% of its portfolio in total.”

“In a widely anticipated move, the Federal Reserve raised the official U.S. interest rate by half a percentage point, while saying it will reduce the size of its balance sheet by $47.5 billion a month for three months and going up to $95 billion a month starting in September.

During a press conference following the decision, Fed chair Jerome Powell also said that ‘50 basis points should be on the table for the next couple meetings,’ and that a 75 basis-point rate hike is not something the committee is considering right now.

The price of bitcoin (BTC) rose 2.77% after Powell’s remarks, from $38,716 to $39,790 at press time.”

See Also: Bitcoin’s ‘Mayer Multiple’ Nears Point of Undervaluation Ahead of Fed

While marketplaces force users to be “beholden to smart contract standards,” SmartMint allows users to customize their smart contracts and own them. The beta version seeks to solve the “intrinsic issue” of smart contract standards in NFT minting.

SmartMint allows users to upload an image, add metadata properties and select a chain to mint on, much like the minting experience on a custodial exchange. But in the background SmartMint deploys a smart contract owned by the user, a major difference.

SmartMint is free to use, despite gas fees associated with minting. [However], SmartMint will receive 2.5% fee on the first sale of the NFT and 1% fee on secondary sales.”

See Also: Starbucks Teases Web 3 Platform in NFT Announcement
See Also: Coinbase Opens NFT Marketplace to All
See Also: APE Surges, Sinks as Elon Musk Teases With Bored Ape Collage as Profile Picture

“Buterin made the latest comments in response to a Twitter post from the “Bankless” podcast host Ryan Sean Adams, who shared a screenshot of the average transaction fees for eight eight Ethereum layer-2 platforms.

The only layer-2 to meet Buterin’s desired transaction fee under $0.05 is the Metis Network at $0.02, however, a token swap on the platform still costs $0.14. Fees sharply increase from there, at $0.12 per transaction on Loopring and going all the way to $1.98 per transaction on the Aztec Network.

Needs to get under $0.05 to be truly acceptable imo. But we’re definitely making great progress, and even proto-danksharding may be enough to get us there for a while! That was the goal in 2017, and it’s still the goal now. It’s precisely why we’re spending so much time working on scalability.

Buterin’s affordable transaction goal is a long-held one that he first stated during an interview in 2017 that ‘the internet of money should not cost more than 5 cents per transaction.’

“The Filecoin Foundation for the Decentralized Web (FFWD) is teaming up with nonprofit news platform MuckRock to bridge the gap between newsrooms and those interested in public documents. FFWD and MuckRock are aiming to integrate decentralized storage technology for DocumentCloud – a platform currently hosting over 8 million verified documents.

It will allow DocumentCloud to become a bridge for newsrooms, non-profits, researchers, and more to move key public interest documents to Filecoin. Decentralized storage will enable more long-term and secure storage for important documents.”

“Random number generators are not new, but the QRNG system is the first of its kind to generate a random number using quantum mechanics. This provides the first genuinely random number mechanism beyond the pseudo-mathematical systems currently used that may be biased or repeated.

API3’s QRNG measures random quantum fluctuations in phase and amplitude of an electromagnetic field in a vacuum to guarantee unpredictable randomness and generate the numbers. The system is currently available as an application programming interface (API) for 13 blockchains.

We measure these fluctuations and convert them into random numbers which are then served to the AWS cloud for distribution via an API gateway.

Web3 and metaverse gaming could be one of the biggest beneficiaries of these kinds of systems, as games continuously rely on a degree of randomness and unpredictability to keep players engaged. People can use random numbers for whatever application they want, from the generation of unique nonfungible tokens (NFTs) and artwork to automated decision making.”