Last Week’s Top 5 in DeFi/NFT News — May 16, 2022

Weekly DeFi/NFT news is a collection of major weekly events/announcements brought from the most trustworthy data sources, such as The Defiant, Spencer Noon, Week in Ethereum News etc. with comments and extra insight from the Bulldax DeFi labs.

Did LUNA become a Meme coin?

• After a death spiral of LUNA and UST, LUNA once again is gaining traction among retail traders with the highest trading of $2,534,450,109 USD volume on Binance.

• Binance has previously stopped trading LUNA, but restarted the trading. CZ, the CEO of Binance, had rebuffed claims that Binance had invested in the latest Luna round.

• As of May 16, Luna is 26970.1% up since May 13.

SEC’s Hester Peirce says new stablecoin regs need to allow room for failure — Cointelegraph

• Commissioner Hester Peirce — also known as the United States Securities and Exchange Commission’s (SEC) “crypto mom” — has backed a regulatory framework for stablecoins that allows “room for there to be failure.”
• “One place we might see some movement is around stablecoins,” Peirce answered, “that’s an area that has gotten a lot of attention this week:”

“It’s been one area within crypto that’s really had quite a moment and there’s a lot of stablecoin use and therefore people are thinking down the road, if this gets even bigger do we want to have some kind of regulatory framework?”

• The depegging of the algorithmic USD stablecoin TerraUSD (UST) early this week was mentioned by officials in the U.S. Capital with United States Secretary of the Treasury Janet Yellen, saying at a Senate hearing on Tuesday that a “consistent federal framework” on stablecoins needs to be developed in light of the situation.
• Two days later, on Thursday, Yellen said that stablecoins de-pegging from the USD was not a threat to the country’s financial stability, as they’re not yet at a scale where a price drop would present a risk. Currently, the market capitalization of the top five USD stablecoins is over $154 billion, or around 11% of the $1.36 trillion total cryptocurrency market cap, according to figures from CoinGecko.

Source: https://cointelegraph.com/news/sec-s-hester-peirce-says-new-stablecoin-regs-need-to-allow-room-for-failure

Alt Layer 1 Trade Unravels as Ethereum Killers Sink Below ETH — The Defiant

• Fantom, Solana, Avalanche, Cardano… These Layer 1 networks are getting walloped by the gravitational pull of the crypto crash this week with Terra’s implosion. They are down between 40% and 60% in the past five days, while Ethereum’s ETH outperforms them all, falling by a still eye-popping 26% in that time.

• In 2021, alternative Layer 1s, or blockchain networks other than ETH and BTC, captured the imagination of investors. They have been dubbed Ethereum killers because they aimed to be faster, cheaper, and more efficient than the original smart contract platform.
• In 2021, alternative Layer 1s, or blockchain networks other than ETH and BTC, captured the imagination of investors. They have been dubbed Ethereum killers because they aimed to be faster, cheaper, and more efficient than the original smart contract platform.

• The recent surge of Near Protocol, a sharded network supporting smart contract execution, has been brought to a halt. NEAR is currently trading for $5.4 after crashing 69% in just three weeks. It is also down 73.5% from its record January high. The TVL of Near’s EVM-compatible sister chain, Aurora, fell by one-third in a fortnight amid the turmoil, sliding to $833M.

Source: https://thedefiant.io/ethereum-killers-suffer-losses/

Do Kwon proposes Terra ecosystem revival plan

• On May 14, Do Kwon proposed a revival plan that includes to reset the network to 1B tokens.
• Proposal includes forking Terra chain. “ Even if the peg were to eventually restore after the last marginal buyers and sellers have capitulated, the holders of Luna have so severely been liquidated and diluted that we will lack the ecosystem to build back up from the ashes. While a decentralized economy does need decentralized money, UST has lost too much trust with its users to play the role.”
• Validators should reset the network ownership to 1B tokens, distributed among:

https://agora.terra.money/t/terra-ecosystem-revival-plan/8701

• Key words: All Luna besides the third tranche should be staked at the network genesis state.
• The future of the Terra Network
• The rallying cry for the Terra community has always been “a decentralized economy needs decentralized money”. This is an exciting vision, and while UST has not been successful the Terra community will find ways of iterating on the idea at some point in the future.
• Binance CEO said on Twitter that the plan won’t work: “forking does not give the new fork any value. That’s wishful thinking.”

Compound Treasury Draws a Rating From S&P in Groundbreaking Move — The Defiant

• Compound Treasury, the institutional fixed-yield product, has received a B- credit rating from S&P Global Ratings, one of the Big Three credit ratings agencies along with Moody’s and Fitch Group.
• Ratings agencies play a critical role in establishing the risk-reward ratio at the heart of the global credit markets. This development constitutes the “first institutional decentralized finance offering to be rated by a major credit rating agency,” according to Compound Finance, the lending protocol from which Compound Treasury partially derives its 4% yields.
• Compound Treasury, launched last June, converts U.S. dollars to USDC, a stablecoin, which are then deposited into Compound Finance to earn yield as people borrow USDC.
• At B-, Compound Treasury’s rating is the same level as a junk bond, which means it’s riskier than an investment grade credit. Yet the very fact that the Treasury product received a rating represents a significant step in the cross pollination of DeFi and TradFi. To provide a rating at all, S&P Global Ratings did a deep dive on the risks and mechanics of the DeFi protocol.
• “The ratings process involved months of education about DeFi, stablecoins, the Compound protocol, the Compound Treasury product, and the operational risks associated with the product,” Robert Leshner, the founder of Compound, told The Defiant.
• The yield for lending USDC on Compound is 0.97%, meaning there’s a negative margin which Compound Treasury needs to supplement to meet its 4% commitment. Leshner told The Defiant that Compound Labs, the company set up to support Compound the protocol, pays the difference.

Source: https://thedefiant.io/compound-rating-sp/