Bored Ape Yacht Club Founders Respond To AllegationsRead More

Around the Blockchain | Terra's Demise, Flow Ecosystem Fund, and 'The Bridged'

Jacob CohenJacob Cohen
Around the Blockchain | Terra's Demise, Flow Ecosystem Fund, and 'The Bridged'

It was an important week in NFT and crypto news outside of the Ethereum ecosystem. The biggest news though was the de-pegging of $UST and the subsequent death spiral of $LUNA, Terra's native token. 

In fact, it was such a large event that mainstream media covered it, even if only by the formal “TerraUSD” name and not the colloquial ticker. Let’s get into exactly what happened, what the fallout was, and what comes next.

What Happened With LUNA?

It would have been nearly impossible to miss the news, but just in case here is the briefest recap: reports of a purposeful trade by either a whale investor or syndicated group of investors, at approximately noon on Monday started to move UST slightly. This is significant because the algorithmic stablecoin is meant to always be worth exactly $1, and any slight change should trigger rebalancing when others look to arbitrage.

In Monday’s nightmare scenario, that de-pegging, meaning UST dropping significantly below $1, led to what in traditional finance is known as a bank run. Essentially, many users tried to withdraw their UST as the price was falling away from $1. This, in turn, caused $UST to drop even further below its $1 peg, which snowballed extremely quickly into a vicious cycle of dropping prices, leading to withdrawals and swaps, leading to more dropping price, until $UST fell below $0.69 at its lowest point of the day.

Unfortunately for the Terra blockchain and UST, this was not the end. Although overnight the coin rallied back up to $0.94, that was the highest point it reached after the de-pegging on Monday. After, $UST soon went back into free fall and went as low as under $0.15. As of this writing, it has rallied (if you can call it that) back up to $0.19, but even that doesn’t tell the whole story.

If you’ll recall, $LUNA and $UST are invariably linked. Additionally, due to the nature of the protocol, all redemptions of UST on the Terra blockchain caused UST tokens to be burned and LUNA tokens to be minted. This quickly caused hyperinflation as the supply skyrocketed by more than 1 billion tokens between Tuesday and Thursday. Not shockingly, that caused the price of LUNA to fall roughly 99%, from approximately $59 at the start of the UST drop all the way down to sub-one cent. The event even caused not one, but two temporary pauses of the entirety of the Terra blockchain.

This whole scenario might lead one to think this was the end of the story. Yet, somehow, the ripple effects and ramifications are still ongoing. Some investors showed faith in Luna’s founder, Do Kwon, and continued to support him and say that Terra will survive and make a comeback. Some even made moves to buy more $LUNA. One now-infamous trader doesn’t understand how math and percentages work (full disclosure, he may have just been a troll in disguise, but he will still forever be known as Mr. 4%):

At the time of writing, LUNA is priced at $0.0002 while UST is $0.09. 

This Week in FLOW NFT News

Yes, other things happened this week and some of them were extremely positive. The Flow blockchain announced on Tuesday the formation of a $725 million Flow Ecosystem Fund to facilitate growth and new projects on the blockchain.

The official Ecosystem Fund website says it “is designed to hypercharge innovation”, while CEO Roham Gharegozlou noted the money will mostly be in the form of investment capital, rather than grants.

More money going into projects usually means new and better technology coming out of them, and in this case, it is very positive for the Flow ecosystem and its, along with web3’s, future.

undefined

Did you know that on Sunday night the annual Billboard Music Awards was hosted? Further, did you know that Flow is partnering with Pepsi to offer free commemorative NFTs of the winners?

Called the “Winners’ Club”, these limited-edition collectibles were made available for minting for exactly 20 minutes following each award’s announcement. 

Solana NFT News

The biggest mint of the week on Solana was easily The Bridged, the second collection in The Fracture’s universe.

Minted in three separate waves, the first 2,612 NFTs of the 9,795-piece collection were free for those who qualified.

The second whitelist wave minted out at the same 3 SOL price as the public sale, but that didn’t deter buyers.

The collection minted out within minutes on Thursday, with part of that time taking longer due to network congestion issues. As of this writing, the floor stands at 5.3 SOL on Magic Eden and 5.9 SOL on OpenSea with a combined close to 42,000 SOL in volume traded between the two sites.

undefined

Other Blockchain News

This week was mostly dominated by the Terra news, forcing a truncated version of the rest of the article. Hopefully, any other blockchain-wide disasters can be avoided this week, leading to a broader market focus and recap next week.

To stay update on all things NFTs, be sure to follow our curated newsfeed on Twitter and here on site

Related articles

Related articles
View All
© 2022 Lucky Ducks, Inc