Following up with Terra, and more from the week

Author

Logan Cloak
May 20, 2022

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Now for the news. Get caught up from the past week in 10 minutes or less:

  • 📉Following up on the Terra collapse

  • 📱New Coinbase features

  • 📰More stuff from the week

Following up on the Terra collapse

Last week, we wrote all about exactly what happened that led to the Terra collapse. Since then, there has been a lot of blaming, speculating, and humbling. So lets break it down.

Shortly after UST de-pegged from USD and the crash ensued, many people in the Terra ecosystem began to question what the Luna Foundation Guard was doing with their reserve Bitcoin. After all, the reserve had been created to minimize the risk of death spiral as we outlined last week.

But, when people began to look into the reserve, they noticed that most of the BTC was already gone. So what happened?

Well, people took to Twitter to accuse and speculate about the LFG was doing until Monday when the LFG posted this tweet thread outlining what transactions they had made in an effort to maintain the peg:

Remember though, that UST was not fully backed by the reserves, so there was never enough buying power in LFG to maintain the peg if an event this extreme happened.

Cryptocurrency research firm, Elliptic created this great visualization to show what the LFG did with their funds:

Then later on Monday, Do Kwon, Terra's now-infamous leader, shared this revival plan for the Terra ecosystem to "reconstitute the chain and preserve the community and developer ecosystem".

Since then, the revival plan has slightly changed and 2nd revival plan was announced on Wednesday with seemingly more support from the ecosystem, and voting began immediately. The new proposal plans to allocate new tokens to pre-collapse holders, with a focus on smaller wallets that would vest over a 2 year period, with a cap on redistribution for large UST holders. So far, the vote is at an 80% yes.

Coinbase adds new features

Coinbase is upgrading its app to include web3 browsing, like many other wallets in the DeFi ecosystem.

This means that users will be able to use decentralized exchanges (in contrast to Coinbase's centralized exchange), use different NFT marketplaces, and access this all in a newly secure way.

Along with the web3 browsing capabilities, users will have a separate wallet that they use to interact with the web that will be highly secure, and you won't have to worry about losing your recovery phrase. Coinbase's lead wallet engineer outlines the security solution here:

So what does this mean?

Well, we think this is huge. The DeFi/web3/crypto ecosystem has lacked a crypto-native, recognizable name and app that they can access from their phone and explore web3. This could potentially onboard the next billion people into the crypto ecosystem if executed correctly.

More stuff from the week

Glossary

No terms that we thought were too confusing this week, but let us know if there's anything you'd like explained further! In the meantime, check out this Web3 Glossary by Blocknative.

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Disclaimer: Rollfi Inc does not guarantee and is in no way responsible for the accuracy of information provided in this message. All information is provided “AS IS” and with all faults. Data presented here may not reflect all activity in the market.