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It’s one of the darkest days the crypto space has ever endured.
LUNA suffers total collapse

LUNA suffers total collapse

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LUNA suffers total collapse

Overview

  • Terra meltdown in real-time.
  • BTC holds steady
  • Stablecoin regulation talks, NASA enters metaverse
  • Hot NFT mints and drops

Watching the Terra meltdown in real-time

The truth is the market will eventually test all protocols to their limits. Unfortunately, for LUNA/UST holders, the test of the UST peg is shedding light on the weaknesses of algorithmic stablecoins. UST is currently at 0.69 cents, and  LUNA continues its march downwards, down 84% to US$4.98.   

Source: Trading View

Total Value Locked on Terra Network decreased from US$29b on May 5th to nearly US$9b yesterday. As far as individual protocols that utilize LUNA, Lido (LDO) appears to have the most significant decrease in TVL. 

Lido protocol allows the staking of LUNA and gives stakers stLUNA in return. stLUNA can be used on other protocols to collect liquidity rewards. In a sense, the entire operation is a form of leveraging. 

A large portion of the stLUNA found its way into Astroport (ASTRO),  which is down -81% in TVL in seven days. These numbers help highlight the domino effects of leveraging in declining markets.

Source: Defi Llama

Lesson learned.

Although a complete tragedy for LUNA holders, some lessons are to be learned from the Terra fiasco. Whether Terra’s UST was a purposeful attack or not is beside the point. 

All networks/protocols must be built to withstand various attacks, hacks, and tests. UST, unfortunately, failed when its time came. UST grew too large, too fast without securing its shores and everyone invested paid the price. Myself included.

This week, the era of experimenting with algorithmic stablecoin as a primary decentralized option in crypto might have reached an unfortunate end. But light can be taken from the situation-downfalls open opportunities to create more resilient blueprints. 


Market update 🌍

BTC is being moved to exchanges at the highest rates since July 2021, near the 2021 BTC low. BTC holders tend to move it into exchanges whenever they plan to sell, but high inflows have also helped spot bottoms, thus rendering the data inconclusive. Whatever the case, many transactions and movements are occurring at these price levels.

Source: CryptoQuant

Bitcoin (BTC) appears to be testing the 30k support, where a lot of volume has emerged. However, the lack of a massive reaction at these levels is bringing into question the strength of the support. On a good note, the relative strength index (RSI) has reached an oversold area touched only three times in the previous two years, indicating a higher probability of a bottom.  

Due to the high correlation between the stock market and crypto, a lot will depend on the inflation rates set to release on Wednesday. BTC completed the US session up 2.34% to $US30,700.

Source: Trading View

US markets closeGain
S&P 500-0.63%
Nasdaq+0.31%
Dow-0.11%
VIX+2.27%

Notable Gainers:

Protocol (Coin)Price ($)Gain (%)
Chain (XCN)0.08+12
Cronos (CRO)0.22+4
Maker (MKR)1115+4
Convex Finance (CVX)20.32+4
Polygon (MATIC)0.87+3
Shiba Inu (SHIB)0.00001572+3
Bitcoin Fear and Greed Index47 Neutral (+7)
“Crypto” Google Trends31
“Bitcoin” Google Trends37 (+3)

Newswatch 📰

Stablecoin regulation. In sync with recent events, US Treasury Janet Yellen calls for stablecoin regulation by the end of 2022 after answering questions from Senator Pat Tomey at a hearing yesterday concerning the  Financial Stability Oversight Council.

Coinbase misses targets. Coinbase (COIN) reported its first-quarter revenue of US$1.17b, which missed estimates of US$1.5b. As a result, the stock fell -by 14% on the news. However, the company stated that it plans to continue on a path helping build the future of crypto despite the missed estimates.

NASA enters the metaverse. Nasa and Epic Games have partnered to build a Martian metaverse simulation to help train astronauts. In accordance, NASA posted a challenge to attract developers to expand a metaverse world named MarsXR, which has mapped large portions of Mars terrain.

News Tidbits:

  • Microstrategy discloses bitcoin contingency plan
  • Avalanche Founder shows support for UST
  • KuCoin raises $150m pre-series B at a $10b valuation
  • Elon Musk to unban Donald Trump from Twitter

On-chain ⛓

  • dYdX (DYDX) iOS app is now live
  • LooksRare (LOOKS) reduces emissions
  • Gaming-focused Swimmer Network is now live

NFT & metaverse update 🐵

Azuki founder, former rugger. In a Medium post released yesterday, Azuki founder ZAGABOND.ETH revealed he was behind failed NFT projects labeled as rug pulls by the communities. After a Twitter Spaces event, ZAGABOND apologized for his past mistakes.

  • Time and SuperRare host TimePieces with artist Beeple and Madonna in a new NFT collab and auction.
  • Starting May 12th, Doodle holders will be entitled to a dooplicator NFT at Doodle.app
ProjectTypeMint priceDate of mintTime
GENE_SISPFP.02 EMay 11th1:00 PM EST
Les FemmesArtAuctionMay 11th6:30 PM EST
Laws of Adrenaline Zlatan IbraSportsDropMay 12th6:30 PM EST

Banter’s take

Events like the Terra blowup help remind us why traders preach certain rules preached. So today, I leave you with a few reminders to help mitigate unexpected future events.

  • Stay diversified
  • Invest only what you can afford to lose
  • Take profits at the tops
  • Dollar-cost average IN, dollar cost average OUT
  • Weaknesses in protocols WILL be exploited

Our hearts go out to you if you were an investor in Terra (LUNA). These are challenging times. Remember that crypto is a young market, and many opportunities will present themselves in the future. Use the opportunity to learn, grow and prepare.

Gabri

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