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Luna under fire: UST faces a tough challenge amidst market-wide volatility
Crypto’s slow bleed continues to track the equities markets…

Crypto’s slow bleed continues to track the equities markets…

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Crypto’s slow bleed continues to track the equities markets…

Overview

  • Load zee Terra FUD. 
  • Some positives from a capitulating market
  • Juno’s $34m blunder
  • NFTs on Instagram

Suspicious activity concerning the UST peg puts LUNA price under further pressure.  

This is the UST/USD chart, and as you can see, price continues to lack just below peg. 

The drama began with a series of significant withdrawals from Anchor Protocol: this weekend, Anchor’s total UST deposits dropped over 20%, from around $14 billion to $11.2 billion. 

Similarly scenes took place over on Curve, where also large amounts of UST were withdrawn from liquidity pools, including a $150 million withdrawal came from Terraform Labs (TFL).

This raised eyebrows and stoked suspicions, but TFL has since confirmed that the withdrawal was part of a redelegation between pools – only for them to then add another $100 million to Curve Pool4 once UST’s price began to fall. 

There have been whispers of an alleged conspiracy, that this is all part of a wider, coordinated effort against Terra, in particular thanks to one specific wallet selling almost $85 million worth of UST for USDC on Curve. 

While another wallet unloaded $108 million UST on Binance. 

But the first responders acted fast. And speculation is high that Jump Capital may have jumped in? After its legendary rescue mission during the Wormhole attack, rumour is that they donned their cape again and helped balance the liquidity pools on Curve. A wallet, which some have suggested belongs to Jump Capital, traded more than $200m UST for USDT on Sunday. 

At the same time, the Luna Foundation Guard announced that it would loan $750 million in BTC to market makers to defend the UST peg, whilst also lending up to $750 million in UST to buy up Bitcoin. It is worth stressing, however, that Do Kwon has been clear that the LFG is not doing so in order to ‘exit its Bitcoin position’, but to ‘have this capital in the hands of a professional market maker who can buy UST if the price is below peg, or BTC if it is above it, thus strengthening the liquidity around the UST peg. 

While it’s been a pretty crazy weekend for Terra and UST, it’s worth remembering that UST FUD is pretty much inevitable during times of market volatility such as we’re seeing right now. But here’s the danger. Luna has become too big to fail. Which is to say, if it fails, it could bring down the market with it. The good news, then, is that there it is in everyone’s interest for the UST to keep its peg, with planty of actors willing to do whatever is necessary to defend it. 


Market update 🌍

The uptrend failed to hold in as BTC’s price experienced its worst week since January, falling by -11.52% to $33,700. There’s been six straight weeks of red candles, something that hasn’t occurred since late 2018, when bitcoin found a $3151 bottom after a year of downtrending. The bitcoin fear and greed index points towards a capitulation in traders after hitting 11 and entering extreme fear. On a good note, there’s been a jump in bitcoin google searches but nothing significant to claim any substantial changes, just an aspect to keep an eye on.  

Additionally,  the Fed continues its treacherous path of fighting inflation at the expense of markets.

Source: Trading View

One chart holding up remarkably well is the ETH/BTC chart. Although the price dumps on ETH and BTC, ETH is holding up relatively better than its golden counterpart. Can the recent uptick in ETH/BTC maintain its upward trajectory to mimic a year-old pattern?

Protocol (Coin)Price ($)Gain (%)
Near (NEAR)11.20+12
Axie Infinity (AXS)31.07+11
Monero (XMR)216.39+8
Curve DAO (CRV)2.4+7
Lido DAO (LDO)2.80+6
dYdX (DYDX)3.80+13
Astroport (ASTR)2.26+7
FLEX (FLEX)4.09+9
Bitcoin Fear and Greed Index11 Extreme Fear (-7)
“Crypto” Google Trends49
“Bitcoin” Google Trends47

Newswatch 📰

Juno copy/paste blunder. $36M in seized Cosmo-based JUNO tokens were mistakenly sent to an unknown address with no access after the community voted on capturing the tokens from Takumi Asano, an early investor, who maliciously gamed the initial token drop. 

On-chain

Matic algo-stablecoin. Polygon (MATIC) has released MALT, an algorithmic stablecoin on the Polygon network.

Bancor 3. Bancor set to launch Bancor 3 on May 11, 2022.  

Tidbits:

NFT & metaverse update 🐵

NFTs on Instagram. Social media platform Instagram, owned by Meta, reveals plans to support NFT from various networks, including Ethereum, Polygon, Solana, and Flow, and will not charge for the service.

Curry shot NFTs. Stephen Curry’s sponsor, Under Armour, plans to release NFTs to celebrate every three-pointer Curry drains during the ongoing playoffs on a first-come, first-serve basis.

Notable Mints:

ProjectTypeMint priceDate of mintTime
BBRCPFP0.10 E9 May11:00 AM EST
GENE_SISPFP.02 E11 May1:00 PM EST

Banter’s take

Competition can be ruthless when it comes to money, and crypto is no exception. The players create solutions to steal users and liquidity from the front and utilize notorious tactics to test the limits of competing protocols in the backend; although unconfirmed, such appears to be the case with Terra’s latest fiasco. 

There are some benefits to the adverse circumstances. Exploits allow teams to spot weaknesses. Then it’s up to them to adapt and grow by improving the matter, whether through code or methodologies. To find the weak spots and quickly build the next iteration. The results help create incredibly resilient protocols. Like in nature, organisms get tested in the wild, and the strongest emerge as survivors while the lesser get outperformed and ultimately go extinct. 

So will Terra be a survivor and maintain its premier status, or will it succumb to underlying pressures? Only time and the resilience of the Terra team will tell.

Gabri

@web3_gabri 

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