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Luna Foundation Guard close to announcing recovery plan for TerraLuna, UST

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Luna Foundation Guard close to announcing recovery plan for TerraLuna, UST

Stablecoins

Do Kwon has taken to Twitter to announce there is a recovery plan for UST. But is it too late?

2 min read

Updated: May 11, 2022 at 1:16 pm

Cover art/illustration via CryptoSlate

Do Kwon has announced a recovery plan in the works for UST and, therefore, the Terra ecosystem. UST has lost its peg from the dollar, and its native token LUNA is down is down 90%, currently trading at a 12-month low of $4.69.

Close to announcing a recovery plan for $UST. Hang tight.

— Do Kwon 🌕 (@stablekwon) May 10, 2022

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The Terraform Labs CEO also apologized for being “quiet,” citing a need for “razor focus to deliver, thanks everyone for the support.”

Since the tweet, UST dropped to 22 cents on the dollar vs. USDT on Binance. The recovery plan was announced when UST had “only” dropped to a low of $0.64. He reiterated the program several hours later, stating that they were “getting close” and asked the community to “stay strong.”

Getting close … stay strong, lunatics

— Do Kwon 🌕 (@stablekwon) May 10, 2022

Amidst the wait for a recovery plan, many users liquidated positions on Anchor Protocol, which led to LUNA losing roughly 90% of its value over the past 24-hours. The call to “stay strong” appears to be falling on deaf ears as the community cries out for help.

Some of the replies are listed below:

Can you hurry up?

My wife and kids already left me because I put our life savings into a stablecoin and it’s no longer stable

— sassal.eth 🦇🔊🐼 (@sassal0x) May 10, 2022

Tell me it’s going to be printing some more fake money without telling me it’s about printing some more fake money.

— Michaël van de Poppe (@CryptoMichNL) May 10, 2022

@stablekwon I panic sold cause i was using it as a savings account. Literally needed it for my tax and rent. I’m guessing no recovery plan for the 20% of my savings that just vanished? Serious question I’m an adult with accountability so can’t be mad at anyone but it hurts…….

— Crypto_Otter (@Crypto__Otter) May 10, 2022

I lost $1,6 million in this #Luna fiasco.

— The Moon (@TheMoonCarl) May 11, 2022

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After recent events, how Luna Foundation Guard will attempt to recover the Terra ecosystem is up for debate.

Given the amount of TVL lost from Anchor Protocol and the emptying of the LFG Bitcoin reserves, it is hard to imagine a way back for what was, until this week, one of the most significant crypto projects in the world.

 Perfect timing for a stablecoin report

The timing of the incident appears to tie in with a US treasury report on stablecoins coincidently. The announcement came amid the first of the significant sell-offs of UST on Anchor Protocol over the weekend. Rumors are circulating that Citadel is behind the initial volatility as a few wallets dumped hundreds of millions worth of UST.

Janet Yellen: The Treasury will issue a report on crypto and stablecoins shortly

— Blockworks (@Blockworks_) May 10, 2022

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Billionaire backer breaks silence on Terra fiasco calling it ‘heart wrenching’

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Billionaire backer breaks silence on Terra fiasco calling it ‘heart wrenching’

Terra › People

Mike Novogratz addresses the crypto community after more than a week of silence on the matter.

2 min read

Updated: May 19, 2022 at 11:30 am

Cover art/illustration via CryptoSlate

Speaking for the first time since the sensational collapse of the Terra ecosystem, Galaxy Digital CEO Mike Novogratz penned an open letter warning of the risks of cryptocurrency.

Galaxy Digital, along with an “all star roster” of investors including Delphi Digital, Lightspeed Ventures, and Pantera Capital, to name a few, backed Terraform Labs to the tune of $150 million in July 2021.

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Such was Novogratz’s belief in the project; he had a LUNA tattoo done just weeks before the implosion. However, the billionaire now says it has become a “constant reminder that venture investing requires humility.”

Source: @WatcherGuru on Twitter.com

Terra’s DeFi for the masses plan goes awry

The spectacular downfall of Terra LUNA and its UST stablecoin served as a harsh lesson to all involved in cryptocurrency. Over $400 billion took flight following UST losing its $1 peg price, decimating token prices across the board.

At the heart of the issue is the fragile algorithmic pegging mechanism used to keep UST at around $1. When the price of UST is less than $1, it relies on users to burn UST while simultaneously minting LUNA. Similarly, when the UST is above $1, users are incentivized to mint UST while simultaneously burning LUNA.

It sounds workable in theory, but what happened coming up to two weeks ago demonstrated the vulnerability of algorithmic pegging. There is no plan b if token holders don’t perform the incentivized action and take flight en masse.

The repercussions of the collapse will see harsh regulation brought in, which may stifle an already under the cosh industry.

Novogratz shares risk management strategies

Novogratz had maintained radio silence as the Terra debacle was unfolding. He posted an open letter detailing his thoughts on the matter some two weeks on.

After summarizing the situation, including how the pegging mechanism broke down, Novogratz said the stories he read of retail investors losing it all were heart-wrenching.

With that, he took the opportunity to share the risk management strategies employed by Galaxy Digital, saying:

“1. Keep a diversified portfolio,

2. take profits along the way,


3. have a risk management framework, and


4. understand that all investments happen in a macro framework”

But most of all, he reiterated the importance of risking only what you are comfortable losing. Due to their high volatility, cryptocurrencies should only make up between 1% – 5% of total assets.

Despite the doom and gloom, using the adage that markets move in cycles, Novogratz clarified that Terra’s collapse is not the end of crypto. With that, he signed off, saying the industry would come out stronger.

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“Together, we’ll weather this storm and come out stronger on the other side.”

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Culture

Is Vitalik Buterin about to jump from Ethereum to Bitcoin?

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Is Vitalik Buterin about to jump from Ethereum to Bitcoin?

Bitcoin · Ethereum › People

Recent posts by Vitalik Buterin suggest all is not well at Ethereum, with some suggesting he wants to work on Bitcoin instead.

2 min read

Updated: May 18, 2022 at 11:07 pm

Cover art/illustration via CryptoSlate

Ethereum co-founder Vitalik Buterin posted a tweetstorm this week revealing contradictions in his thoughts and values.

Buterin listed ten distinct contradictions, including reducing reliance on people versus building lasting systems and his love of decentralization and democracy versus a tendency to agree with intellectual elites over “the people.”

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Thread: some still open contradictions in my thoughts and my values, that I have been thinking about but still don’t feel like I’ve fully resolved.

— vitalik.eth (@VitalikButerin) May 17, 2022

Surprisingly, several of the contradictions mentioned suggest Buterin is not happy with Ethereum, specifically, its protocol design. What’s more, he also spoke about his desire to make his project more Bitcoin-like.

Some have taken this to mean Ethereum’s transition from Proof-of-Work (PoW) to Proof-of-Stake (Pos) is proving more difficult than expected.

Speculation is mounting that Buterin wants to develop on Bitcoin instead.

Trouble at Ethereum?

Last month, Ethereum Protocol Dev Tim Beiko said the Merge would not happen in June, as previously announced.

The Merge refers to merging the concurrently running PoW and PoS chains. This event represents a significant milestone in completing the ConsenSys layer (ETH 2.0). Current estimates put a rollout date of between Q3/Q4 2022.

Considering the constant delays, It’s clear that devs are struggling with the scale of the task at hand.

Buterin’s tweetstorm talks about a desire to turn Ethereum into a robust protocol capable of withstanding “extreme circumstances.” Perhaps events at Terra reminded him of what’s at stake if things go wrong.

Nonetheless, he continues by saying this desire belies the reality that crucial ETH dApps are vulnerable to attack. Additionally, this situation falls below what is acceptable from a security perspective.

“Contradiction between my desire to see Ethereum become an L1 that can survive truly extreme circumstances and my realization that many key apps on Ethereum already rely on far more fragile security assumptions than anything we consider acceptable in Ethereum protocol design.

Taking this in, Input-Output CEO and former colleague Charles Hoskinson responded by saying, “it’s not too late to come to Cardano.”

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Buterin sympathizes with Bitcoin maximalism

Last month, Buterin posted a blog in which he discussed Bitcoin maximalism.

Bitcoin maxis are often accused of being toxic and narrow-minded. But Buterin argues that a “healthy dose of intolerance” is excusable in defending the ideology of the most “honest” cryptocurrency.

“What if Bitcoin maximalists actually deeply understand that they are operating in a very hostile and uncertain world where there are things that need to be fought for, and their actions, personalities and opinions on protocol design deeply reflect that fact?”

The post goes into great depth on the topic, covering issues such as developing sound money, first movers being the most “genuine,” and intolerance being necessary to counter bad actors. Buterin ended by advocating for more maximalism.

It’s fair to assume the Ethereum co-founder is a strong proponent of Bitcoin and those who uphold its ideology at the expense of all others.

When taken in conjunction with his recent tweetstorm, specifically the post in which he wished for Ethereum to be “more Bitcoin-like,” some suspect Buterin wants to leave Ethereum to work on Bitcoin.

Contradiction between my desire to see Ethereum become a more Bitcoin-like system emphasizing long-term stability and stability, including culturally, and my realization that getting there requires quite a lot of active coordinated short-term change.

— vitalik.eth (@VitalikButerin) May 17, 2022

The CEO of Bitcoin Magazine, David Bailey, commented that such a move was far from being on his “2022 Bingo card.”

Vitalik bouncing from ethereum to work on Bitcoin was not on my 2022 Bingo card.

— David Bailey🇵🇷 #FreeRoss (@DavidFBailey) May 17, 2022

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CZ on Terra LUNA collapse: ‘This is what diamond hands looks like’

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CZ on Terra LUNA collapse: ‘This is what diamond hands looks like’

Binance › Terra › People

For the purposes of transparency, CZ revealed Binance’s dealings with Terra including a near $1.6 billion loss incurred on holding LUNA.

2 min read

Updated: May 18, 2022 at 11:21 am

Cover art/illustration via CryptoSlate

In the wake of the Terra ecosystem implosion, Binance boss ChangPeng Zhao (CZ) commented, “this is what diamond hands look like,” about the 15,000,000 LUNA tokens Binance had received as part of the company’s $3 million investment in Terra.

At their peak, the tokens were worth $1.6 billion, but as of May 18, they are valued at roughly $2,740.

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This is what diamond hands look like, the coins were never moved off the receiving address.

This is a non-trader hold strategy. If you adopt this strategy, you should also have some diversification. NFA. https://t.co/yRtAHlzHmz

— CZ 🔶 Binance (@cz_binance) May 17, 2022

Despite the scale of loss, CZ said Binance is willing to stand aside and have retail users compensated first part of its stance on protecting users.

Not financial advice

CZ disclosed the firm’s key dealings with Terra and the amount of LUNA it holds to increase transparency and “protect users.”

As well as revealing the firm’s LUNA holdings and relevant address, CZ also said Binance made $12 million UST through staking those holdings. But, as Binance charged zero fees on UST pairs, the firm made close to nothing on trading fees,

During the thread, CZ added that the priority during this difficult time is “protecting users.” For that reason, he has asked the Terra team to compensate retail users first.

4/ Now the important part.

To lead by example on PROTECTING USERS, Binance will let this go and ask the Terra project team to compensate the retails users first, Binance last, if ever.

Binance (after a 5 min discussion) fully support this proposal. 👇https://t.co/QnMx8aZ09A

— CZ 🔶 Binance (@cz_binance) May 16, 2022

CZ picked up where he left off the following day with the “diamond hands” tweet. Although he moderated that comment by saying adopting this non-trader strategy is best with a diversified portfolio. Not financial advice.

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CZ is doubtful about Terra’s recovery plan

CEO of Terraform Labs Do Kwon has put together a recovery plan to rescue what remains of the Terra ecosystem. Monday, May 16, Kwon tweeted details of the project, which involves forking into a new chain that does not have an algorithmic stablecoin element.

6/ The Terra chain as it currently exists should be forked into a new chain without algorithmic stablecoins called “Terra” (token Luna – $LUNA), and the old chain be called “Terra Classic” (token Luna Classic – $LUNC). Both chains will coexist.

— Do Kwon 🌕 (@stablekwon) May 16, 2022

However, CZ said the plan “won’t work” and expressed doubts that the new chain will hold value to the same degree as the old chain. To illustrate his point, CZ likened this strategy to forking Bitcoin at November 2021’s high and expecting that new chain to be valued at some $1.3 trillion.

“Do they really think they can fork BTC at the snapshot on Nov 18, 2021, and the new fork will have the new BTC at $68,000 [the price on that day]?

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