Here's your latest intelligence brief on the tokens and markets relevant to ReFi that are contributing to growth of the sustainable and regenerative Tokenised Earth Economy.
Earth State Markets
The markets are REKT! And this is a sober reminder of the systemic, non-linear failures that can (and will) result from over-engineering and over-gearing financial systems in our complex and interconnected world.
A giant has fallen. The entire terra ecosystem has virtually been wiped out. The Terra ecosystem had the largest algorithmic stable coin in the market, known as $UST. It had so much adoption that even centralised exchanges had it as a trading pair.
This algorithmic stable coin worked well whilst there was a demand for both $UST and $LUNA. But if both lose demand, it falls into a death spiral, and the tokenomics basically hard-code it to keep going down, until the peg is restored.
It looks like this was a targeted attack, as the downward spiral all began when the Luna Foundation removed $150m from the Curve 3 pool in preparation for the new Pool 4. Liquidity was drained, and the depeg began. Mass panic ensued, and Do Kwon’s tweets were not reassuring. Suddenly, $14 billion of UST sitting in Anchor protocol started selling. $LUNA and $UST combined had a market cap of around $60 billion. To put that into perspective, Enron, at its high, was worth $70 billion. The Luna foundation did have a reserve of $3 billion BTC to protect the peg, but it doesn’t look like it was fully deployed, as they most likely realised it wouldn’t be enough.
This led to an all-round mass-market sell-off. The Cosmos ecosystem was hit particularly hard as it had massive exposure to $LUNA and $UST in LP pools. But anyone in Defi knows how deeply $UST was spread across almost every chain. During this mass sell-off, we were at least optimistic that US inflation numbers would come in better than expected. But unfortunately, the opposite occurred. Inflation numbers came in higher than most expected. A 75% bp hike is back on the table.
📈Reference Markets over the past week
📊Impact Markets over the past week
📉DAO Shares over the past week
ℹ️ Remember that DAO’s with a rebase mechanism should be valued on their treasuries, and market cap increases are a more important metric than token prices, as high yields try to outpace price fluctuations.
In the wake of the downward spiral, Romain gives his analysis of $LTC and explains how the OG @litecoin demonstrates for ReFi the core utility of decentralised electronic payment systems – regardless of what the currency tokens represent.
Earth State Snippets
- The White House wants to know. What are the energy and climate implications of digital assets? KlimaDAO responded to this Request for Information and you can read more about this here.