🙍♀️ Chances For Terra Luna And $UST To Recover Are Slim To None
gm fellow degens 🥸
Today’s newsletter will be mostly dedicated to Terra LUNA which is more like a continuation of what we discussed in our previous newsletter. If you have not gotten the chance to read it yet, you can check it out below.
A lot has happened since yesterday. One of the craziest days in the crypto space. Both, $UST and Terra Luna are in a freefall. While $UST is supposed to maintain a 1:1 peg ratio with $, currently is sitting at $0.32 (lowest was at $0.29), while it’s sister token, LUNA is down 97% at $0.91.
$UST is not backed by any specific asset (algorithmic stablecoin) which is different compared to other stablecoins. Its price is maintained by creating and destroying supply through a swap with Terra Luna token. $UST is the third largest stablecoin by market cap, right after $USDC and $USDT. Selling pressure on Terra LUNA was mainly because there were 46 million tokens issued from LFG, trying to maintain the UST’s peg to dollars.
On Luna TERRA’s Reddit, suicide helplines have been pinned as post. While for someone who is not invested in Luna or UST, this might seem like a small issue, but there are people who lost literally all of their investments.
This is a really important reminder on how volatile and crazy this space can be. Investing with only the money you would not mind losing is the best idea for now, until web3 becomes more mainstream and a bit more regulated, managed and owned through properly setup DAOs.
Do Kwon, who is the founder of Terra Luna, came out with a “rescue plan” on Twitter earlier.
In his tweet, Kwon gives the idea of increasing basepool from 50M to 100M SDR (special drawing rights) and decrease the PoolRecoveryBLock from 36 to 18, which in turn with increase minting capacity approximately four times, from $293M to ~$1200M.
Will see how it plays out in the end. But I feel like we are at a point where chances of Luna and UST to recover are impossible at this point.
🤦♂️ Here Is Why Coinbase Sucks
I wrote an article about Coinbase marketplace where I did a review about their platform. It was pretty disappointing to see what they rushed to deliver. To prove my point, there were less than 900 transactions for an entire week after it opened (here’s a Dune dashboard that keeps track of Coinbase NFT marketplace trading).
Just like their NFT marketplace was not enough, they had their earning announcements the other day (read it here). They stock price did plummet after they reported a quarterly loss of $430 million and a 19% drop in monthly users.
Besides that, on the earnings report released, Coinbase holds roughly $256 billion on behalf of customers (this includes both fiat currency as well as cryptocurrencies). Then this was followed by a paragraph which definitely made users really flip on them.
Moreover, because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors.
What this basically means, in case of any bankruptcy of Coinbase, you will never see your money as it will be treated as unsecured debt and you have no right to claim it. This should NEVER happen.
This should serve you as a reminder that you should never hold big bags of investments in exchanges. Hold them in a cold wallet instead. There is a need for a Decentralized Exchange more than ever.
👨🏻💼 Interesting Stats About web3 Space
