This Week In Crypto #12
This week has been full of turmoil. We witnessed the collapse of the largest decentralised stablecoin in the history of crypto and Web3, leading the traditional world to call for immediate regulations on these types of assets.
At the same time, we saw Germany issuing guidance on crypto taxation, whilst over in LA, Solana Pay took centre stage to showcase their new features. And remember, the markets may be down, but the building continues. Nothing seems to be able to stop this emerging industry from pushing on and on.
The collapse of LUNA and UST
Terra ecosystem stable coin UST and its native token Luna have been at the forefront of the crypto world this week.
A swap on Curve finance to the tune of $85 million (UST-to-USDC), caused one of its liquidity pools to feel stress. Rumours of a potential UST depeg started creeping up on Crypto Twitter. The market panicked, and as a result a $2B withdrawal of $UST happened on Anchor Protocol. The UST 1:1 peg to the dollar started collapsing. The fear of a total UST/USD depeg, and UST’s potential fall to $0, had people selling their positions.
Due to the nature of how UST and Terra’s native token LUNA work, LUNA started falling as well. Selling UST means creating more LUNA tokens, so as a result LUNA’s price started falling as the total circulating token supply increased. One thing led to another, and soon the pressure was too high for both UST and LUNA. LUNA fell -99.9% (LUNA) and UST lost its peg, falling all the way down to an all time low of around $0.04.
In this time of turmoil, people looked to Do Kwon, the CEO of Terra (Terraform Labs), and the Luna Foundation Guard. They decided to halt the entire Terra blockchain in order to reconstruct it.
The Terra blockchain has officially halted at block 7607789.
Terra Validators have halted the network to come up with a plan to reconstitute it.
More updates to come.
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) May 13, 2022
And now news have been released around Do Kwon’s relation with a failed stable coin from the past, Basis Cash (BAC).
UST losing its peg, and many people losing their wealth, caused Janet Yellen, US Secretary of the Treasury, to publicly call for regulations to be put in place around stable coins by the end of the year.
Janet Yellen wants stablecoin legislation done by the end of the year pic.twitter.com/zd9HWqAbnR
— Blockworks (@Blockworks_) May 10, 2022
Cardano (ADA) Wallets Break New All-Time High
A report from CryptoCompare has shown that the number of wallets on Cardano is increasing, and hit an all time high. This comes even though activity on the blockchain has taken a hit recently, with monthly transactions falling 62.2% to 1.17 million, and average active addresses falling 57.7% to 52,000.
“The number of addresses holding ADA grew 2.99% to an all-time high of 5.20 million in April. This includes an increase in the number of holders from 529,000 in March to 679,000 in April.”
Meta and Polygon collaboration
Almost out of nowhere, we were suddenly hit with news that Meta is partnering with Polygon to further their reach into web3.
In a tweet of his, Ryan Wyatt, CEO at PolygonStudios, stated that Meta was choosing Polygon for their carbon neutral footprint, their scaling capabilities and the increasing amount of developers building on the chain.
https://twitter.com/fwiz/status/1523676688000831488?s=21&t=qE7rUbVGIPamqcXLlQHTsw
Instagram and NFTs
Somewhat side-by-side with the Meta and Polygon partnership, we also got the announcement that Instagram will soon be supporting Ethereum, Solana and Polygon NFTs on its platform.
With the move, these NFTs will be able to reach Instagram’s massive 1.1bn users. Another big win for the art and collectibles industry.
Looking to flaunt your NFT collection on @Instagram? @Meta launches digital collectibles #poweredbyPolygon!
Select creators and collectors can now showcase their NFTs to a wider audience.
Know more: https://t.co/Kzgm1EYoOd pic.twitter.com/EU9FjtoJgA
— Polygon (@0xPolygon) May 9, 2022
Solana Pay
In case you missed it, the Solana Pay team introduced their users to transaction requests, which enable two way interactions between merchants and consumers.
Through its use, merchants will be able to offer personalised transactions to their customers, utilising both the web2 and web3 world. The way it works is really noteworthy, with merchants even being able to mint NFTs for their customers upon the transaction taking place.
Read more about it here.
1/ 💸 #SolanaPay took over @AtlasCafe_SF to showcase the future of payments.
Watch @SherazShere demo a brand new Solana Pay feature — transaction requests, which enables merchants to bring on-chain interactivity to their purchase flows. https://t.co/pQ9ovmFukh pic.twitter.com/PDlWqIVF0u
— Solana (@solana) May 6, 2022
Germany Publishes Tax Guide for Crypto
Germany’s federal finance ministry, and Parliamentary State Secretary Katja Hessel, have issued guidance on the income tax treatment of crypto, making it the first time nationwide information like this has been released on the topic.
In the guidance, it was stated that staked and lent cryptocurrencies will be tax free if held for over one year. It also talked about how mining, staking, lending, hard forks and airdrops would be treated.
Bankless
This week we saw YouTube banning educational web3 accounts, such as Bankless, and deleting their content, and hence ability to share information with their audiences.
It wasn’t long until Susan Wojcicki, CEO of YouTube, came out to, not only admit to their mistake in banning the accounts, but also surprisingly express their interest in web3 and crypto, and the role that YouTube can play in it.
We clearly made a mistake, @BanklessHQ. 🫢 Glad our teams were able to fix things quickly. Can you DM me your contact info and we can talk offline? Love the level of conversation happening around crypto on YouTube – very interested in web3 and the role we can play in the topic! https://t.co/IYyGiZ9IjE
— Susan Wojcicki (@SusanWojcicki) May 9, 2022
Reflection
If you’re feeling down right now due to the recent events in the crypto space, the best thing to do is probably zoom out… to see what is being built in the entire industry. Developers, users, entrepreneurs and investors remain highly active in this market whether it is moving to the upside or to the downside (pricewise).
No one wants to hear it right now, but the calls I’m having with Web3 entrepreneurs building things for the next expansion are off the charts.
That future is very bright ☀️
— Chris Burniske (@cburniske) May 12, 2022
Continuing to build is what really matters if you are part of the space. Stay positive. We are only just getting started!
Here is the message from Arweave founder Sam Williams:
Just build.
— 🐘🔗 sam.arweave.dev (@samecwilliams) May 11, 2022
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