May 10, 2022       /       Unchained Daily       /       Laura Shin

Daily Bits ✍️✍️✍️

• Digital asset investment products saw a $45 million inflowlast week.

• Compound Treasury, an institutional DeFi platform, received a B- credit rating from S&P.

• LedgerEdge, a blockchain bond platform, went liveyesterday.

• India is considering a 28% Goods and Services Tax (GST) on all crypto transactions

• The Department of Justice indicted Luiz Capuci Jr. for allegedly orchestrating $62 million worth of fraud in a crypto mining scheme.

• Galaxy Digital lost $111.7 million in Q1.

• The total value locked in DeFi is at its yearly low.

• Coinbase’s stock price dropped 20% to a record low yesterday.

Today in Crypto Adoption…

• El Salvador purchased 500 BTC during yesterday’s dip.

• The Federal Reserve emphasized that stablecoins remain “prone to runs” in a May 9th report.

• Nouriel Roubini, a noted crypto skeptic, announced plans for a tokenized dollar alternative.

• A new WordPress plugin would allow 455 million websites to easily accept Dogecoin.

The $$$ Corner…

• SO-COL, an NFT influencer platform co-founded by Irene Zhao, is raising funds at a $100 million valuation.

• Luxury NFT platform Arianee raised $21 million in a Series A funding round.

• Dirt, an NFT newsletter about entertainment and culture, raised a $1.2 million seed round.

What Do You Meme?

What’s Poppin’?

Anchor TVL Cut In Half Since Last Week

The algorithmic stablecoin Terra USD (UST) lost its peg to the dollar again yesterday, dipping to a daily low of $.66 at one point – a drastic decrease compared to its move down to $.985 earlier this weekend.

The depeg came despite the best efforts of the Luna Foundation Guard (LFG), an organization that controls a ~$3 billion treasury containing BTC, AVAX, and UST to help maintain the UST peg to the dollar. On Sunday night, the LFG Council announced a loan of $1.5 billion of its assets to an unnamed market maker to help defend the UST peg. The move sent $750 million of BTC and $750 million in UST to the unnamed firm, which, according to LFG, “will trade the capital on both sides of the market.” Do Kwon clarified that “The goal is to have this capital in the hands of a professional market maker such that: 1) Buy UST if price < peg, 2) Buy BTC if price >= peg, thus significantly strengthening the liquidity around UST peg.”

As currently constituted, the LFG bitcoin reserves are now worth less than $1 billion. The team has sent out over $1.3 billion in BTC to help maintain the UST peg, according to the official LFG BTC wallet.

The depegging of UST is having a negative impact on other Terra-based assets.

LUNA, the governance token and sister token to UST, is down~45% over the past day and ~60% over the last week. Anchor Protocol, the largest DeFi platform on Terra that is famous for offering ~19% yield on UST, has seen its native token ANC drop ~50% in the last day. Even more distressing is that the amount of UST staked, or locked up into, Anchor has plummeted. Data from DeFi Llama shows that approximately $9 billion in value has fled the platform since the beginning of the week, marking a TVL decrease of roughly 45% and also leading to a glut of UST coming back onto the market, which puts further pressure on LFG’s efforts to keep UST pegged to a $1.

As of press time (7:30 pm ET), UST has yet to recover back to its peg since dipping under $1 at around 8 am ET Monday morning. Terra founder Do Kwon tweeted on Monday afternoon that LFG is “Deploying more capital,” before advising the market to stay “steady.”

Recommended Reads

1. Paradigm on surviving crypto cycles (from March 2021):

2. Mario Gabriele on social tokens:

3. Alex Beckett on rollup fees:

On The Pod…

Will Optimism’s OP Token Draw People Back to Layer 2s on Ethereum?

Kain Warwick, founder of Synthetix, and Ben Jones, cofounder and chief scientist at Optimism Foundation, discuss the current state of Ethereum Layer 2s, Optimism’s new governance structure, why Synthetix chose to build on Optimism, and more. Show topics:

• what Optimism and Synthetix are

• how zero-knowledge rollups differ from optimistic rollups

• why Synthetix decided to build on Optimism

• what makes L2s more enticing to build on than other L1s

• how Optimism’s governance is going to change with the launch of the Optimism Collective and OP token

• what issues Synthetix has had with Discord governance and early token voting, and how they have now solved this by forcing users to consolidate wallet addresses

• what retroactive public goods funding is and how it could create a “flywheel” of development on Optimism

• why whales might be excluded from Optimism’s token grant to Synthetix

• why Ben thinks the future is about the “superchain” rather than multi-chain

• what Kain and Ben think about bridging between L2s and Mainnet

• why Optimism is a staunch backer of EIP 4844

• how the merge could affect Optimism and Synthetix

Book Update

You can purchase it here: http://bit.ly/cryptopians