Results of the week: Do Kwon proposed Terra hardfork, and $8000 test was predicted for Bitcoin
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Proof-of-Stake algorithm and other events of the outgoing week.
Peter Schiff predicted a test of the $8000 level by Bitcoin
Peter Schiff, a supporter of gold and a critic of the first cryptocurrency, said that the price of Bitcoin will test the lower boundary of the corridor around the $8000 mark. He came to this conclusion based on technical analysis.
At the same time, Glassnode analysts noted that amid the collapse of UST, BTC quotes approached the fair price level.
At the time of writing, the first cryptocurrency trading near $29,900.
BTC/USDT hourly chart of Binance exchange. Data: Trading View.
At the end of the week, almost all digital assets from the top 10 by market capitalization were in the red zone. The exception is Binance Coin (BNB) and Cardano (ADA). The price of the first one increased by 7%, while the price of the second remained almost unchanged.
Data: CoinGecko.
According to the CoinCodex service, the PEOPLE management token of the ConstitutionDAO project has risen in price the most over the week among moderate-cap digital assets. Its price has increased by more than 115%.
Expectedly, the TerraUSD algorithmic stablecoin fell in price more than others. UST price dropped by almost 60%.
Data: CoinCodex.
The total capitalization of the cryptocurrency market amounted to $1.34 trillion. Bitcoin dominance index rose to 42.5%.
Do Kwon proposes hard fork of Terra
Terraform Labs CEO Do Kwon proposes hard fork of Terra with new network and airdrop. He called it “a chance to revive the project from the ashes.”
The new network is supposed to keep the name Terra with the LUNA token. The initial blockchain will become Terra Classic with Luna Classic (LUNC) respectively.
The project will continue development without a new algorithmic stablecoin.
The total emission of LUNA will be 1 billion tokens, the target reward for staking (inflation) is 7%. Voting on Kwon’s proposal was launched on May 18 and will run until May 25.
Most community members did not support the idea of a hard fork in the preliminary vote. However, in the main process, the proposal has already passed the quorum threshold.
Kwon also made changes to the proposal, editing it “with the opinions” of the ecosystem participants.
The media reported on the investigation into the collapse of Terra in South Korea
South Korean authorities have re-established an interagency group, disbanded more than two years ago, to investigate the collapse of Terra. Previously, the team was nicknamed the “Grim Reapers”.
The media also reported on potential parliamentary hearings involving Kwon regarding the collapse of the project’s ecosystem.
How the community reacted to the collapse of Terra
Ethereum founder Vitalik Buterin urged Terraform Labs to focus on compensation to small investors in LUNA and UST. According to him, “rich” people are able to bear personal responsibility.
It is not entirely clear how exactly it is possible to return lost funds. This week, non-profit organization Luna Foundation Guard revealed that it drained its $3 billion reserve fund in an effort to keep the UST sustainable.
Billionaire CEO and founder of Pershing Square Capital Management Bill Ackman called Terra a crypto pyramid, while the CTO Tether Paolo Ardoino stated that the product was “poorly designed”.
The silence was also broken by the founder of the cryptocurrency bank Galaxy Digital, Mike Novogratz. His structure became one of the main investors in Terraform Labs, and the billionaire himself got a tattoo on his left arm with a reference to LUNA.
Novogratz admitted that the collapse of the Terra ecosystem undermined confidence in the DeFi sector and the cryptocurrency market as a whole, although the idea of creating an algorithmic stablecoin looked promising.
Forbes journalists also noted the impact of the incident on the digital asset industry. In their opinion, the collapse of the project in terms of its impact on the industry is not inferior to the bankruptcy of Mt.Gox, the hack of The DAO, the explosion of the ICO bubble and the collapse of the crypto market in March 2020.
Whales revealed losses due to the collapse of UST and LUNA
The head of Binance, Changpeng Zhao, revealed the company’s investment in the Terra ecosystem and noted that at the time of the collapse, the exchange owned 15 million LUNA, which are now almost worthless.
The collapse of Terra cost blockchain company Hashed $3.5 billion in losses. Against the backdrop of the incident, the investment research firm Delphi Digital could also lose up to 13% of its assets – this was the equivalent of the peak value of the purchased LUNA tokens.
The founder of the Avalanche project, Emin Gun Sirer, said that the non-profit organization Avalanche Foundation lost $60 million who invested in Terra.
However, not all Terra investors lost money. Pantera Capital reported that the company cashed out about 80% of investments in the project ecosystem with a big profit.
What to discuss with friends?
- The SEC “did not recognize” the ex-employee in the video provided by Ripple.
- Sam Bankman-Fried doubted the future of bitcoin as a means of payment.
- Butyrka’s leadership was suspected of illegal mining.
- The court overturned the decision to block the Tor website in the Russian Federation and sent the case for review.
Deus Finance DAO stablecoin DEI lost its peg to the dollar
UST is not the only algorithmic stablecoin to lose parity against the US dollar. On May 15, the price of DEI from the Deus Finance DAO project fell to levels near $0.51. The incident coincided with the publication of a proposal to launch a fixed-rate debt token program from DEUS Treasury.
Tether cut USDT collateral in commercial securities by 17%
In Q1 2022, the stablecoin issuer USDT – Tether Holdings Limited – reduced its holdings in commercial securities by 17%. By the end of the second quarter, the company intends to reduce the amount of collateral in these assets by another 20%.
Accounting firm MHA Cayman, which performed the audit, confirmed that the company’s reserves exceed the amount needed to fully repay USDT.
The Aurora team will airdrop the native token and launch the new platform
The developers of the protocol of the second network level NEAR – Aurora – announced the launch of the Aurora + platform with native token staking. It will be distributed during an airdrop among users who register with the service during the first week.
The State Duma of the Russian Federation adopted in the first reading the bill on taxes on digital assets
The State Duma supported in the first reading the bill on taxation of transactions with digital financial assets (DFA).
The document establishes the specifics of taxation of VAT transactions on the implementation of the CFA, corporate income tax and personal income tax on profits from the sale of digital assets.
This week, the Ministry of Internal Affairs of the Russian Federation also agreed on the finalized draft laws “On Digital Currency” and “On Amendments to Certain Legislative Acts of the Russian Federation in Connection with the Adoption of the Federal Law “On Digital Currency”.
At the end of the week, the State Duma was submitted draft law on amendments to the Civil Code, fixing the concept of NFT.
Robinhood will launch a non-custodial crypto wallet, and Revolut will issue its own token
Online broker Robinhood announced the creation of a non-custodial Web3 wallet that will provide users full control over the cryptocurrency and direct access to the DeFi and NFT segments.
Revolut founder Nikolai Storonsky announced neobank’s plans to issue its own digital token as part of the development of a customer loyalty program.
Ethereum developers announced the timing of the transition to the Proof-of-Stake algorithm
The planned transition of Ethereum to the algorithm Proof-of-Stake (PoS) consensus will take place in August, said one of the lead developers Preston Van Loon.
According to him, the team expects to complete the process, which is called “merging” [The Merge], before the activation of the “difficulty bomb”.
Ethereum developers have previously said that on June 8, 2022, the project team will transfer the Ropsten test network to PoS algorithm.
Also on ForkLog:
- WSJ journalists talked about the signs of insider trading in the crypto market.
- Ex-head of BitMEX Arthur Hayes was sentenced to two probationary year.
- Bill Gates explained the absence of cryptocurrencies in his investment portfolio.
- MimbleWimble update was activated in the Litecoin network.
What to read and see?
In an exclusive article, ForkLog looked into the reasons for the collapse of Terra, assessing the current and possible future consequences for the industry, as well as the chances of the project to recover.
Interest in decentralized autonomous organizations (DAO) in the cryptocurrency industry is growing rapidly. They told who came up with the concept of DAO, what types of decentralized organizations exist, and why people unite in distributed communities.
We released a series of educational cards: about Vitalik Buterin, algorithmic stablecoins, hard fork and the 1inch project.
In traditional digests, we have collected the main events of the week in the areas of cybersecurity and artificial intelligence.
The cryptocurrency industry is attracting an increasing number of institutional players. This is evidenced by new investments in infrastructure, and the increasing attention that companies are showing to bitcoin as an asset class. The most important events of recent weeks are in the ForkLog review.
On Monday, May 16, live ForkLog LIVE discussed what is happening with the cryptocurrency market. Traders Vladimir Cohen and Anatoly Radchenko were guests.
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