TerraUSD Fallout Shakes The Crypto Market, Do Kwon Proposes Hard Fork

TerraUSD and Luna collapse

Volatility is nothing new in the crypto market, but the collapse of algorithmic stablecoin TerraUSD (UST) sent a shockwave through the entire sector.

The price of TerraUSD plummeted far below its targeted $1 peg. Luna, the Terra blockchain’s native currency, also dropped nearly 97% in the 24 hours to 4:30 pm ET Thursday, May 12.¹ This catalyzed the collapse of the broader crypto market and wiped out nearly $1 trillion.² Prior to its crash, TerraUSD was the world’s third-largest stablecoin and had been touted as a more stable alternative to other cryptocurrencies.¹

Terra founder Do Kwon proposed a hard fork of the Terra blockchain in his “Terra Ecosystem Revival Plan 2”³ on May 16, which includes ditching the algorithmic stablecoin UST and creating a new chain.

Under the new governance proposal, the new chain will be referred to as “Terra” with the native token LUNA, while the old chain will be called “Terra Classic” and exist with TerraUSD and Luna Classic.⁴

FTX CEO takes a 7.6% stake in Robinhood

FTX CEO Sam Bankman-Fried is reported to own a 7.6% stake in Robinhood Markets Inc. (HOOD) equal to 56.27 million shares, according to a recent SEC filing.⁵ The announcement sent shares of Robinhood soaring 33% in after-hours trading on May 12.⁶

Bankman-Fried notes in the securities filing that he considers it an attractive investment and does not currently have “any intention of taking any action toward changing or influencing the control of [Robinhood].”⁵

More brands enter the NFT scene

Spotify is testing a new feature that allows artists to promote their NFTs on their profiles. The company says that this test is part of its efforts to enable artists to deepen their connections with fans both on and off its platform.⁷

Recently, Meta has also partnered with Polygon to create an NFT platform for Instagram and Facebook. Limited testing of NFTs on Instagram is underway⁸ and similar functionality will come to Facebook soon, according to its CEO Mark Zuckerberg.

Global crypto regulation in the books?

According to a senior watchdog official, it’s possible that global market regulators will launch a joint body within the next year to “better coordinate cryptocurrency rules.”

Ashley Alder, chair of the International Organization of Securities Commissions (IOSCO), says that the boom in digital assets is a key area of focus for authorities and cites cybersecurity, operational resilience, and a lack of transparency as key risks in the crypto world.⁹

Sources

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