What’s the solution to Terra’s UST and LUNA crisis?

What’s the solution to Terra’s UST and LUNA crisis?

Terra’s LUNA and UST stablecoin implosions are roiling the crypto world and beyond. Picking up the pieces won’t be easy — nor finding a good path forward.

The “road to hell is paved with good intentions,” but that’s no comfort to the many people who have lost all their money as a result of the estimated US$50 billion Terra UST/Luna crash, a crash that took place in just three short days. A decentralized stablecoin designed as the ultimate payments system “combining the price stability and wide adoption of fiat currencies with the censorship-resistance of Bitcoin”  that didn’t require any financial collateral seemed fine in principle, but when it stopped working, human collateral damage was the end result, both in terms of loss of savings and devastation of lives.

The repercussions are just starting to be felt, from talk of government regulation from U.S. Treasury Secretary Janet Yellen, to Tether temporarily losing its 1:1 peg to the dollar to as low as US$0.95, and the impact on the price of Bitcoin thanks to Terra selling off its collateral reserves in a vain attempt to shore up the value of its UST stablecoin.

To confirm the basic point driving one of the biggest collapses in crypto’s short history, last Thursday Terra’s pegged Luna token dropped in price from its high in April of US$118 to US$0.09, while TerraUSD (UST) hit US$0.04. And despite all that, plenty of self-styled #LUNAtics — the project’s fans, including developers and Terra itself — refused to admit the party was over. In a Twitter thread on Wednesday, May 11, the ever-confident Terra co-founder Do Kwon tried to sound reassuring, telling the Terra community: “I understand the last 72 hours have been extremely tough on all of you — know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this. Together.” That didn’t work.

“You can’t mint your way out of bankruptcy all the time,” tweeted Binance CEO Changpeng Zhao, also known as CZ, after Terra announced that their blockchain had resumed block production as if there’d just been a technical hitch.

Taking a step back from this mess, what caused the collapse of the UST/Luna system? And what happened to the US$3.5 billion Bitcoin that Terra had bought to steady the ship? Rumors that either the hedge fund Citadel, the asset manager BlackRock or crypto exchange Gemini created the crash have been rejected by the companies, and persuasively shot down by B2C2 founder Max Boonen.

Any discussion of the cause of the crash cannot ignore that as an algorithmic stablecoin not pegged to any collateral, it used a two-token system, allowing users to swap Luna to Terra’s UST and vice versa for a guaranteed price of US$1, with the difference that it was based on its own layer-1 blockchain. And Terra’s UST was itself propelled by a key dApp on that blockchain called Anchor, which was offering yields of 20%. Anchor’s total value locked (TVL) grew from US$8.65 billion on Jan. 1 to US$17.05 billion at its peak on May 6. And as UST began to show signs of strain in late March, a team in the form of the Luna Foundation Guard (LFG) started to buy Bitcoin, amounting in total to US$3.5 billion between January and May this year.

It should also be noted that as an algorithmic stablecoin, UST is not a decentralized stablecoin. Terra used a consensus mechanism called “delegated proof of stake” (DPoS) that meant control was in fact concentrated in the hands of “a few validators” — no doubt the same hands that controlled the Bitcoin collateral. On May 9, LFG announced that it would “Loan $750M worth of BTC to OTC trading firms to help protect the UST peg,” which, according to Elliptic, was followed by a further US$930 million, to the same address, and the 52,189 BTC was sent together to a Gemini address. CZ tweeted on Sunday May 15, “I would like to see more transparency from them. Much more! Including specific on-chain transactions (txids) of all the funds. Relying on 3rd party analysis is not sufficient or accurate. This is the first thing that should have happened.” This was eventually confirmed by the LFG on May 16 in a tweet: “Transferred 52,189 $BTC to trade with a counterparty, net of an excess of 5,313 $BTC that they have returned, for an aggregate 1,515,689,462 $UST.” With just 313 BTC remaining (approximately $9 million, plus other assets) as highlighted by Laura Shin on May 16.

For the sake of transparency and for the crypto community as whole, not just for UST/Luna users who have lost so much, Do Kwon needs to come clean about a few things. He needs to own up to his troubles with the U.S. Securities and Exchange Commission and his involvement in Basis Cash, a previous failed stablecoin project. He needs to give a frank disclosure as to what has happened with the US$3.5 billion Bitcoin collateral, to show where it is now. He needs to talk in terms of these specifics and not provide warm words and simply talk of re-launching Terra in some form or another. If he cannot learn from his past mistakes then he’s doomed to repeat them in some form or another, and the rest of the industry will suffer the consequences.

Certainly, in the interim, we should welcome the positive attitude of SEC Commissioner Hester Peirce, who recognizes that the market does need room to allow for trial and error, but also adds that due to the variation in types of stablecoins, it’s also “difficult to craft a regulatory framework.” I’m less optimistic about Terra’s plans to resurrect the platform by forking, as CZ tweeted “forking does not give the new fork any value. That’s wishful thinking.”

In the latest twist on May 16, CZ confirmed Binance had received 15,000,000 LUNA (at a peak worth US$1.6 billion) plus had US$12,000,000 in UST from staking. “To lead by example on PROTECTING USERS, Binance will let this go and ask the Terra project team to compensate the retails users first.”

For the sake of both Terra users and the wider crypto community, things need to be sorted out as soon as possible. Practically speaking, the devil is in the detail, and that’s what we need to grapple with now, for the sake of everyone involved.

Original Source: https://forkast.news/whats-best-solution-terras-ust-luna-crisis/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Banning cryptocurrencies not a solution, say experts

Banning cryptocurrencies not a solution, say experts

New Delhi: All eyes are on the much talked about Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 to be introduced in the winter session of Parliament beginning next week. In a meeting chaired by Prime Minister Narendra Modi on 13 November, he had flagged the issue of misleading non-transparent advertising on crypto currency. Stressing the point on how “unregulated” markets cannot be allowed to become avenues for “money laundering and terror financing”, a major concern and issue for the government was how youths of the country are misled and over promising and non-transparent advertisements attract youths. In the craze for more and easy money and a better future, youth are, in fact, being led to a bleak future. But the government is also aware that this is an evolving technology and thus steps taken by government will be progressive and forward-looking. The RBI continues to be a critic of crypto currencies, saying they pose serious threats to macroeconomic and financial stability of the country. While details of the said bill are not known, the 2021 bill seeks to prohibit all private crypto currencies in India with certain exceptions to promote the underlying technology of crypto currency and its uses. The bill also seeks to “create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India”.

While there is lot of noise around whether the Indian government will ban crypto currencies or not, global experts say ban is not the solution and more regulations on crypto transactions, legal framework and penalties on fraudulent activities will help.

The Sunday Guardian talked to some experts to know views on the same. Anndy Lian, an inter-governmental blockchain adviser and investor and chairman at BigONE Exchange, which is a global digital asset, says, “There is need for better regulation and education to support the estimated 15-20 million crypto investors in India, who are benefiting from using crypto currency to send and receive money around the world, through to earning money from playing blockchain-based games such as Axie Infinity. As a government, one cannot stop the move to decentralization. With India’s crypto adoption ranking second in the world in the recent 2021 Global Crypto Adoption Index, this move looks like it will not only hurt individuals, but also larger businesses. Compared to Vietnam and Pakistan, the country has a significantly larger share of large institutional investors, suggesting that India’s cryptocurrency investors are part of larger, more sophisticated organizations. To ban cryptocurrency as part of a wider strategy to roll out their own central bank digital currency (CBDC) will therefore seriously undermine the nation’s crypto and blockchain business community, with the crypto industry in India currently seeing over 100% growth month-on-month growth, despite the government’s alleged desire to foster innovation in the blockchain sector.”

New Delhi-based cyber law expert Virag Gupta said: “While crypto is spreading like wildfire, there should be no delay in its regulation. The delay in bringing a law has given an opportunity to certain exchanges to create a parallel empire of cryptocurrency. Crypto currency and Bitcoin scams have surfaced and regulation is much required.” He also said it’s a misconception to believe that a conducive regulatory environment will harm the crypto currency sector. Rather, to cement a certain future, detailed jurisprudence diving deep within the currency and technology is essential. “Taking the benefit of zero regulatory framework around crypto, the “self-styled godmen” of this industry have made their own regulatory mechanism and code of conduct which have put the Indian law-making machinery in a bad light for the world. The biggest question now is: How is the government planning to levy and recover tax on money being made by crypto trading exchanges and apps? If it is treated as capital gains, then the players get undue benefit and if it is treated as business income, then the whole illegal system turns legal,” Gupta said, adding: “In the proposed law, if cryptocurrencies are not accepted as legal tender, how will it be treated as an asset class and who will be its regulator. Non-levy of GST in various layers of its transaction and non-imposition of income tax with penalty is causing huge loss to the state and central government revenue.”

Hayden Hughes, CEO of Alpha Impact, a social trading platform, said like other central banks across the world, the RBI is “fearful” of losing control over monetary policy and seeks to rapidly push a Central Bank Digital Currency while slowing down mainstream crypto currencies. “The RBI has been battling the Supreme Court over the fate of crypto currencies in India since 2018, in a ban that was ultimately overturned. The thesis is that if CBDC adoption can occur, the threat will be mitigated. While it’s clear that there will be some restrictions, the latest draft of the bill has not been made public. There has been explicit references to “exceptions” in the bill, and the devil will be in the details. Even if there is a total ban of crypto currencies in India, we only have to look to China to see that firms would immediately offshore their operations. Only on-shore crypto companies would be affected. Bitcoin and cryptocurrencies are, after all, decentralized, meaning they cannot be shut down. If China cannot shut crypto down, India won’t be able to either.”

Aliasgar Merchant, Developer Relations Engineer at Tendermint, which is the core contributor of Cosmos SDK with flagship products such as Starport and Emeris, said: “A blanket ban on crypto currency will have a negative impact on the Indian economy. Apart from immediate effects like drop in value, institutions working on cutting technology like blockchain will lose trust and ultimately there will be a brain drain. While I recognize the potential misuses of crypto, the government should be focused on regulating crypto rather than putting a blanket ban on crypto. This brings us to the question will people stop investing in crypto? Decentralized exchanges like Emeris, Uniswap, etc could be used which will ultimately defy the purpose of a ban. This is very similar to banning alcohol in a state. People interested smuggle the spirit, ultimately costing the government millions in taxes.”

With crores of Indians invested in crypto currencies with their holdings totaling billions according to industry estimates, many are worried about the future. At the same time, many feel this is an opportunity in the hands of India as a country to show the path to others towards the crypto world and it will be interesting to see how India grabs this opportunity.

 

 

 

About Sunday Guardian

The Sunday Guardian is a Sunday newspaper founded by journalist, author and politician M.J. Akbar in 2010. The newspaper is divided into two sections: news and features, with 20 pages dedicated to each section. Both provide interesting perspectives which is a mix of news, investigation, opinion, entertainment, lifestyle and issues of human interest. M.D. Nalapat is the editorial director of the newspaper. The newspaper has two editions—Delhi and Mumbai.

The newspaper is owned by the ITV Network of Kartikeya Sharma, Managing Director ITV Network (Information TV Pvt Ltd), which also runs news channels India News and NewsX.

 

Also found on Epaper, page 17: https://www.sundayguardianlive.com/e-paper/28-november-2021/

 

Original Source: https://www.sundayguardianlive.com/news/banning-cryptocurrencies-not-solution-say-experts

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Local company Linfinity offers supply chains a solution to combat fraud

Local company Linfinity offers supply chains a solution to combat fraud

Supply chains besieged by counterfeit goods may soon find an answer in blockchain.

Finding out your swish designer bag is a fake might lead to outrage. But manufacturing scams can have far more drastic consequences — both for brands and consumers

Economically, around 2.5 per cent of global imports — about US$0.5 trillion (S$0.7 trillion) a year — are counterfeit, reports the Organisation for Economic Co-operation and Development.

The human cost is higher. In 2008, an estimated 300,000 babies in China fell ill after consuming milk powder tainted with melamine. It led to the deaths of six of them from kidney disease.

A GLOBAL PROBLEM

As global markets open up, supply chains have become more complex.

Before reaching consumers, all types of food and products now go through more suppliers, manufacturing plants, ports-of-call, storage facilities and retailers, adding logistical complexity to their production.

Despite technological advances and digitalisation worldwide, pockets of analogue interfaces still exist. Where they occur along a supply chain, companies can lose track of inventory, making them vulnerable to fraud.

In the era of Industry 4.0, how can new technologies help snuff out risky inefficiencies?

BLOCKCHAIN TO THE RESCUE

One Singapore-based company aims to build an ecosystem for anti-counterfeiting that is sustainable, trusted and traceable.

Linfinity, positioned as the world’s first distributed supply chain platform that harnesses blockchain, IoT (Internet of Things) and Big Data technologies, seeks not only to improve efficiencies from end to end, but enable reliable collection of data.

Mr Anndy Lian, chief executive officer of Linfinity Singapore, notes that rising demand for transparency in the entire production process, from procurement to logistics, has made the application of blockchain critical.

With more accurate data, businesses can make better decisions to reduce waste.

IMPROVE EFFICIENCY AND STAMP OUT FRAUD.

WAGER ON A DECENTRALISED LEDGER

At the core of Linfinity’s solution offering is the blockchain, a decentralised, distributed ledger that lives in the cloud and records contracts, transactions and events in an encrypted form.

While the most oft-cited use of blockchain technology currently is Bitcoin, blockchain has the potential for much wider application across industries.

Blockchain has been touted as a “transformational” or “foundational” technology — a game changer akin to how the Internet revolutionised information, the economy and society in the late 1990s.

Specifically, the use of blockchain technology in the supply chain industry offers these advantages:

· Enhanced transparency: A product’s journey can be documented from origin to destination, increasing trust among players in the ecosystem.

· Scalability: Any number of users can participate in the supply chain and transfer information to one another.

· Better security: A ledger, such as the blockchain, would self-regulate the system, improving on previous internal audit inefficiencies.

· Engaged stakeholders: Using an incentive model (e.g. tokens, cryptocurrency and a system of smart contracts that automates payments), it allows automation of payments and quick transactions, actively benefiting all parties involved.

· Increased innovation: Once a blockchain system is in place, smart contracts can be used to increase efficiency, integrating with the rest of the system.

PROTOTYPING THE FUTURE

As companies push ahead in a fast-changing environment, an agile, test-and-learn approach is key. Early this year, Linfinity commenced its Linfinity blockchain project, published a White Paper and started testing its service platform.

The firm also established Linfinity Talks, a global roadshow platform that demonstrates blockchain projects, and sought out strategic collaborations with various companies.

It has signed Memorandums of Understanding with companies in Singapore, the United Kingdom and Taiwan, with more lined up. These partnerships span different industries from finance and legal to logistics and fast-moving consumer goods. They will see Linfinity’s implementation of blockchain technology improving efficiency and transparency of supply chains.

This month, the company launched its own digital currency, Linfinity tokens (LFT) on Chinese-based exchange CoinEx.

Says Mr Lian: “We are serious about asserting ourselves as a player within the blockchain industry. With our launch on the market, we hope to be able to foster and encourage inter-platform trading with Linfinity tokens.”

TOWARDS INFINITE POSSIBILITIES

As hype about blockchain grows, so have the number of questions about its usage, limitations and potential applications. Even so, it is likely that the technology will take years — even decades — to mature, and its deepest implications may not be immediate.

The adoption of new technologies takes time, and needs the buy-in of policy makers, industries, corporations and end users.

Mr Lian notes that while blockchain remains a relatively new approach to supply chain management, companies need to anticipate government challenges and regulations ahead.

Nonetheless, blockchain’s decentralised nature makes it difficult for governments to intervene. They cannot totally ban access to blockchain, as they did with Facebook in China.

Mr Lian adds that even as Singapore’s government fine-tunes its registration processes and taxation, companies can rest assured that Singapore would embrace technological advancement, rather than preven t it.

After all, a future with greater transparency, efficiency and authenticity is a future worth building.

 

https://www.straitstimes.com/business/local-company-linfinity-offers-supply-chains-a-solution-to-combat-fraud

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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