What Terra’s Collapse Shows About Accurate Blockchain Data

What Terra’s Collapse Shows About Accurate Blockchain Data

With the start of the bear market in crypto coinciding with the Terra crash the value of understanding market metrics is even more apparent. What’s long dogged analytics is the question of how accurate on-chain data is for assessing the overall picture, with leading analytics company Chainalysis noting the issue of fake exchange volumes back in 2019 for example. At the same time more recent a study of the drivers for crypto market movements from the World Bank highlighted that total off-chain volumes appeared to be significantly larger than on-chain transactions. Some industry estimates indicate a roughly 6:1 off-chain to on-chain volume ratio. The total off-chain volume in the first half of 2021 was approximately $16 trillion, compared to $2.8 trillion on-chain volume. This means the report does not include purchases of crypto-assets with fiat currency, sales of crypto-assets for fiat currency and swaps between crypto-assets.

But is this lack of precise crypto data such much of a problem, apart from the researchers at the World Bank, surely on-chain data is sufficient to provide investors and traders what they need to know? Certainly, a good case in point is what the use of on-chain data to understand the Terra collapse, employed by Nansen’s research team. Through analysis of open data on the blockchain they discovered that a small number of players identified vulnerabilities early intro the UST de-peg, particularly in terms of the shallow liquidity of the Curve pools securing Terra to other stablecoins. In simple terms, the data showed these players withdrew UST funds from Anchor to Terra, bridged these funds from Terra to Ethereum, swapped large amounts of UST to other stablecoins in Curves liquidity pools, and during the de-pegging arbitraged inefficiencies between pricing sources from Curve to centralized exchanges. As a result, Nansen’s team were able to disprove the popular ‘attacker’ thesis supported by Terra themselves up until the present with the launch of Luna V2. And instead, it concluded in more objective terms that the collapse “could instead have resulted from the investment decisions of several well-funded entities”.

The question of the Bitcoin reserves is explored in a recent Forbes piece on the rise of off-chain metrics. What is clear from Glassnode is that of the 80,394 accumulated by Luna Foundation Guard (LFG) was emptied between May 9 and May 10, “with 52,189 BTC were sent to Gemini via over-the-counter desks, which were then deployed elsewhere, including Binance, and 28,205 BTC were transferred to Binance directly.” While this may sound like an aberration bear in mind that tracking Bitcoin as held on exchanges has been decline for some time, with these internal market trades already on the rise. As touched on in the World Bank report the rise of Bitcoin ETFs and ETPs could account for an additional 7% of circulating supply. From this perspective Bitcoin’s 17.3% decline in April was partly down to ETPs and ETFs and funds selling 15,000 Bitcoin. In other words, it marks the rise of trading activity off exchanges which makes understanding the range of data from on-chain to off-chain more important going forward. In addition, as shown in the World Bank report, the attitude the big institutional players take in the global Bitcoin market are far less sensitive to local intra-country economic factors. “For example, they may provide trading, exchange, market making, and custody services and may have diversified operations across countries which may make them less susceptible to local macro-economic conditions in individual countries,” the report found, whilst also admitting that “country factors also matter little for crypto volumes associated with smaller transactions. We leave deeper analysis to future research.”

Consider the thesis put forward by Arthur Hayes, co-founder of 100x, that the collapse of Terra was down to VCs that looked to cash out their Luna positions with “minimal market impact.” Because of the public nature of the blockchain key investors cashing out their Luna positions would be easily detected. However, due to the design of the protocol, which allowed in a 1:1 peg for Luna holders to redeem their holdings for the stablecoin UST, in principle with no impact on that peg and the value of Luna (which at its peak was $118). Therefore, rather than going through the more public channel of exchanges and instead using Over-The-Counter (OTC) involving direct trading between two parties the argument is that after converting Luan to UST the VCs then swapped for other stablecoins with no market impact: “My boy estimates that close to $5 billion of these flows took place. The start to the TerraUSD meltdown occurred when the peg broke slightly on Curve. This happened as too much UST was supplied relative to other stables like USDT and USDC. Once the peg begins to break slightly, and confidence in a quick reversion wanes, the negative convexity of the algo stable coin design takes over and creates an unstoppable downward force,” added Hayes in detailing the process of the $50 billion ‘death spiral’.

Back to on-chain metrics for another view of the current rash in the price of Bitcoin, bearing in mind the importance of also considering the off chain data such as wider macro-economic trends (the Fed’s moves on interest rates being an obvious example). Raghu Yarlagadda, CEO of FalconX, said regarding the value of on chain metrics, “the on chain analysis is still very relevant – it’s like if Apple were to report its quarterly earnings, however, instead of waiting 90 days to receive this information, you get it in real-time.” Indeed, backing up the pivot back to the focus on tried and tested in chain metrics for tracking the value of Bitcoin is the observation that some $53K made their way into exchanges on May 9, the single-highest inflow since November 2017. The main source? The Bitcoin from the LFG, which led to it crashing to its lowest level since late 2020 at just over $25K.

I believed that in the current crypto market it was worth investors and traders considering both on-chain and off-chain data. “The case of Terra’s crash shows it pays to see what the bigger players such as VCs are up to, as well as the day to day on chain price of Bitcoin. It’s also important for all exchanges to be honest about their own off-chain data in the form of trading volumes, to help rebuild trust in the crypto markets right now. That’s going to be particularly important in the near future as regulators are emboldened by the Terra crash to move forward with new restrictions.” Lian added that a controversial May 6 Reuters report using outdated information, in detailing alleged criminal transactions amounting to $2.35 billion by Binance, further underlined the value of accurate data to all stakeholders within the crypto industry.’

 

Original Source: https://www.securities.io/what-terras-collapse-shows-about-accurate-blockchain-data/

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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Cosmos crypto price prediction: Where next after Terra’s crash?

Cosmos crypto price prediction: Where next after Terra’s crash?

ATOM, the native token of the Cosmos network, saw a bullish run in 2021, surging 453.3%.  In the beginning of 2022 the token continued the momentum, rising above $40. But, the surge was short-lived amid negative sentiment in the cryptocurrency markets fuelled by Russia’s invasion of Ukraine.

The crash of the LUNA token and the TerraUSD (UST) stablecoin at the start of May 2022, both based on the Cosmos network, were also key driving points in the cosmos cryptocurrency’s decline.

Where is the token headed now? Here we take a look at what factors are shaping the cosmos crypto forecast for 2022 and beyond.

What is cosmos (ATOM)?

Coined as “the Internet of Blockchains” by its founding team, Cosmos aims to build an ecosystem of independent interconnected blockchains, allowing them to “interoperate while retaining their security properties”. It was co-founded by Jae Kwon and Ethan Buchman in 2016.

Blockchains can interact through its architecture of zones. Users can build multi-asset public Proof-of-Authority (PoA) and Proof-of-Stake (PoS) blockchains, like the Cosmos Hub.

Through this the network aims to solve a number of limitations of cryptocurrencies, including scalability, usability and sovereignty. The end goal, the platform’s website notes, “is to create an Internet of Blockchains, a network of blockchains able to communicate with each other in a decentralised way.”

The network’s focus on customisability and interoperability sets it apart from other projects.

Cosmos is based on the Tendermint Byzantine Fault Tolerance (BFT) consensus algorithm designed to ensure finality, order consistency and optional availability. The network also consists of the Cosmos SDK, an industry standard for building blockchains.

Cosmos’ IBC (inter blockchain communication) allows blockchains within the ecosystem to connect so that they can transfer tokens and other data between one another frictionlessly and seamlessly.

In addition, users can also create marketplaces allowing for permissionless global trade. They can build autonomous application-specific blockchains, rather than smart contracts, to avoid high transaction fees and network congestion.

Moreover, users can also create games with unique collectibles in the form of non-fungible tokens (NFTs) and character upgrades that they can monetise without third-party approval or app store fees.

According to the network’s website, there are currently (30 May) 265 apps and services on Cosmos, including the Binance Chain (BNB), Terra (LUNA) and Crypto.org (CRO), with over $66bn of digital assets under management.

While the Cosmos Hub is a multi-asset distributed ledger, it offers ATOM, its native token. ATOM is the only staking token of the Cosmos Hub, and acts as a licence, allowing holders to vote, validate or delegate to other validators.

The token can also be used to pay for fees on the platform to mitigate spam, similar to Ethereum’s ETH. The token provides security to the chain, allows holders to earn rewards and vote.

As of 30 May, there are over 289m tokens in circulation, according to CoinMarketCap. The token has a market capitalisation surpassing $2bn and is ranked as the 29th biggest cryptocurrency on the platform.

The bullish run: Technical view

The ATOM cryptocurrency was listed on CoinMarketCap in March 2019. It was trading in bearish territory until the start of 2021. In February 2021, ATOM  surged by 174.2% from the low of $7.3839 to its first peak of $20.25 on 13 February. Between February and May, the token managed to grow an additional 42.1%, reaching above $28 by 9 May 2021.

The ATOM crypto value bottomed out between May and July, dropping by 67% to $9.4857 on 20 July 2021. This bear trend provided an opportunity for a new bull run, which saw the ATOM/USD price surge to the all-time high of $44.54 on 19 September 2021.

The token’s record level came ahead of the platform’s participation at Mainnet 2021, an immersive, agenda-setting summit held annually for crypto industry leaders.

ATOM to USD chart, Mach 2019 – May 2022

ATOM saw new highs once again in October 2021, surging to $43.22 on 26 October 2021 as Cosmos announced that Terra became the latest chain to enable IBC, bringing its native LUNA cryptocurrency as well as its TerraUSD (UST) stablecoin with it.

The cosmos cryptocurrency entered 2022 on a positive note, surging by 97.9% to $41.99 on 4 January 2022 from its $21.22 17 December 2021 low. A second surge followed on 16 January 2022, which saw ATOM’s value rise to $43.61. This was due to several reasons.

Firstly, Cosmos reported to have neared EVM-protocol compatibility, which would allow assets and projects that operate on the Ethereum network to migrate over to Cosmos. Secondly, the project announced that a liquidity staking module was coming to the platform, which would give additional functionality to the stakes chain assets.

That, however, was the last time ATOM was so close to its all-time high as it embarked on a bearish run for the remainder of 2022. Wider negative crypto market sentiment was fuelled by the start of the war between Russia and Ukraine, as well as bitcoin (BTC) falling below $27,000.

What is your sentiment on ATOM/USD?

The token lost around 79% of its value, hitting as low as $9 by mid-May 2022, as seen on the chart above. Today (30 May), the coin is valued at $9.94.

ATOM technical analysis provided by CoinCodex, as of the time of writing (30 May), showed that sentiment on the token was largely bearish.

Relative Strength Index (RSI) reading of 32.5 was neutral yet extremely close to oversold territory. A reading of 30 or below would indicate that the asset has become undervalued and a trend reversal is likely. Meanwhile, the token was trading above its three-day moving average but below its five and 10-day moving averages.

Can ATOM recover?

In the latest cosmos crypto news, the network’s Gravity Bridge announced a number of milestones at the start of March 2022, including the introduction of ATOM with Ethereum DeFi and the Cosmos NFT platform, Stargaze, working with Gravity Bridge to send NFTs from Ethereum to Cosmos.

In April 2022, Cosmos introduced  its Theta upgrade which saw the official launch of Interchain Accounts, a module that has the potential to boost interoperability, traffic and composability.

In May 2022, KYVE, the Web3 data lake solution, joined the Cosmos ecosystem and migrated most of its blockchain protocol from EVM-based chain to the Cosmos SDK-based chain.

At the beginning of May 2022, the prices of the LUNA cryptocurrency and the UST stablecoin crashed, losing over 90% of their values within days. The tokens were based on the Cosmos network.

“As always, the cosmos ecosystem will continue to be a nurturing and safe environment for bold entrepreneurs to bring forth the Internet of Blockchains. Tendermint, IBC and the @cosmos SDK are showing the world how resilient & secure they are under extreme market conditions,” Cosmos said on Twitter during the LUNA crash.

In December 2021, Cosmos promised that its hub will continue to grow in the coming year, announced the launch of interchain security and accounts, more decentralised finance (DeFi) projects and the rise of NFTs.

“Cosmos is not a new token. It has been around since 2017 and has survived through all the down periods. Cosmos constantly remained in the top 50,  although many new investors may not have heard of it as it is not marketed that aggressively unlike Polygon or Binance Smart Chain,” BigOne Exchange chair in Asia, Anndy Lian told Capital.com.

According to Lian, the ATOM token took off because the Cosmos network offers “a simple experience for blockchain developers” with  “easy-to-understand tutorials, tools, and community assistance for developers.”

In 2020, Jae Kwon stepped down from his position as one of the project’s co-founders to focus on a different project. This, according to Lian, is one of the biggest uncertainties for the Cosmos prediction.

“He exited back then after several high-ranked employees left the company in protest of his leadership and it was reported that Kwon’s return to NewTendermint has continued to feud with his former Tendermint colleagues. I am not sure what is the truth and what are the backstories for this, but I think the lack of unity within their group makes this token vulnerable,” he noted.

Lian added that at the moment, ATOM has a strong support around the $9 range.

“Falling below this amount would mean that it may go below its launch price. This could happen too. Apart from the internal risks, I would caution all to look at external risks to manage your portfolio better.”

Cosmos (ATOM) price prediction 2022-2030

Despite the latest downward price action, algorithm-based forecasting service Wallet Investor gave a bullish outlook for its ATOM prediction, as of 30 May, suggesting ATOM is “an awesome long-term investment” with long-term earning potential at 752.13%.

Based on its analysis of past price performance, Wallet Investor’s cosmos coin price prediction suggested that the token could trade at $26.389 in 2023 and $84.685 by 2027.

DigitalCoinPrice also gave a positive ATOM crypto price prediction but saw a much slower pace of growth in future years. The site projected that ATOM could reach the target price of $13.76 by the end of 2022, $18.73 by the end of 2024 and $24.33 by 2025.

By the end of 2027, the site’s cosmos crypto price prediction expected that the coin could reach $34.02. Its long-term ATOM coin price prediction showed the cryptocurrency could trade at $49.10 by 2030.

Note that algorithm-based and analysts’ projections can be wrong. Forecasts and analysts’ expectations shouldn’t be used as substitutes for your own research. Always conduct your own diligence and remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and goals.

Keep in mind that past performance doesn’t guarantee future returns. And never invest or trade money you cannot afford to lose.

 

Original Source: https://capital.com/cosmos-atom-price-prediction

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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What is Terra Luna 2.0? Everything you need to know about Terra’s fork

What is Terra Luna 2.0? Everything you need to know about Terra’s fork

The Terra Luna community has approved of the revival plan that would see a hard fork from the failed token and the creation of a new blockchain Terra 2.0.

Earlier this month, LUNA crash made headlines, sending shockwaves through the wider cryptocurrency space, with bitcoin (BTC) and ethereum (ETH) crumbling and cryptocurrency trading platform Binance (BNB) forced to suspend trading.

The luna coin is part of a dual-token system along with Terra’s US dollar-pegged stablecoin Terra USD (UST).

Terra USD is an algorithmic stablecoin, which means that its peg to the US dollar is ensured by algorithms and game theory, using a series of smart contracts to keep the price at $1.

When UST unpegged from the USD on 9 May, UST redemptions massively inflated LUNA supply, driving the price down by 99%. The UST crash happened as the algorithms could not keep up, forcing the Luna Foundation Guard and its governance team to sell their bitcoin reserves to save the stablecoin.

This caused BTC to drop to $27,000 and wiped out nearly $400bn of the total cryptocurrency market value.

What is LUNA 2.0?

In a new plan proposed by Kwon, the Terra blockchain would undergo a hard fork, with the launch of Terra 2.0 and the old luna tokens being  renamed into luna classic (LUNC). Kwon’s revival plan has passed with 65.5% majority approval.

The snapshot for Terra 2.0 given by Kwon gives an idea of how the blockchain would work and states that the new Terra will be created without the algorithmic stablecoin.

The Terra Builders Alliance have provided technical details on integration, decentralised applications (dApps) migration, and a guide to rebranding the original Terra chain as ‘Terra Classic’.

The tokens will be renamed as Luna Classic (LUNC), and while the original Cosmos chain will continue to operate, the option to mint or burn coins will be disabled.

The new blockchain is due to arrive on 28 May, according to Terra’s twitter. “The community has been working around the clock to coordinate the new chain’s launch,” the project said.

Terra Station, Terra Finder, the project’s block explorer, and Terra Observer, the project’s feeder for dApps, will all have full functionality when the network goes live, according to Terra’s team.

How will LUNA Classic work?

What is Terra Luna Classic (LUNC)? It’s simply a new token that will replace failed LUNA coins. In the latest LUNA 2.0 news, the new tokens are being airdropped to LUNA and UST holders on 28 May, according to Terra’s Twitter.

There are predetermined groups that are receiving airdrops of the new LUNA coins:

  • Community pool will receive 30% of the token distribution, with 10% earmarked for developers.
  • Pre-crash LUNA holders will receive 35% of the new tokens.
  • Pre-crash UST holders will receive 10% of the new tokens.
  • Post-crash LUNA holders will receive 10% of the new tokens, including staking derivatives – 30% of the tokens will be unlocked at genesis, with the remaining 70% vested over two years, with a six-month cliff.
  • Post-crash UST holders will receive 15% of the tokens – 30% of those are unlocked at genesis, and 70% will be vested over two years, with a six-month cliff.

Terra will airdrop the new LUNC tokens to all LUNA holders with at least 10,000 of luna tokens or less “to ensure that small luna holders have similar initial liquidity profiles”.

The governance will also remove Terraform Labs’ (TFL) wallet from the whitelist for the airdrop, to make Terra a fully community-owned chain. Additionally, a large portion of the token will be allocated to Terra dApp developers to make the ecosystem successful in the long run and provide network security.

Terra LUNA recovery will depend on how its developers and governance team manage to prepare core public infrastructure, wallets, GEN file, execute the launch, provide oversight on essential development programs and act as a steering committee for the new chain.

Meanwhile, Terra ecosystem has millions of users globally, and the Terra Station allows developers from across the world to work together on multiple projects from decentralised finance (DeFi) to fungible labour markets, enabling them to use state-of-the-art infrastructure and gain community experience.

LUNA Classic forecast

“No matter what the price is and how the fork is going to turn out, the more immediate thing to do is to stabilise the projects in their current ecosystem.”

by Anndy Lian, chairman at BigONE Exchange

The future of Terra (LUNA) depends on its successful rebrand and launch. With the Terra community’s strong support to give LUNA a rebirth, the team is on the recovery plan. Popular Terra Classic projects, Astroport, Nebula, Prism, RandomEarth along with several others, will be migrating to the new Terra.

As of 27 May, the LUNA classic price stands at $0.0001313, according to CoinMarketCap’s Terra Classic market page. However, as Terra Chain will be rebranded as Terra Classic the price data would migrate to Terra V2 CMC page.

As the new LUNC coin is at the very early stage, it is extremely difficult to forecast its further direction. As of 27 May, an algorithm-based forecasting service Price Prediction suggested that the new coin to average at $0.00017152 in 2022, rising to an average of $0.00052103 in 2025, and averaging at $0.003 by 2030.

However, these predictions are based on algorithms and do not consider the current scenario. A rebranding attempt to save the crypto and regain the community’s trust will depend on how the launch plays out and if the Terra team can succeed in the airdrop mission as promised.

Anndy Lian, chairman of the Netherlands-registered crypto trading platform BigONE Exchange said that Terra community is remaining strong, yet he’s uncertain for how long.

“They are willing to make changes on their own. Some of them even go to the extent of sending their own wallet to the burn address to help reduce the supply. This is the kind of commitment you see on the ground,” he told Capital.com in a note.

“But such moves by the community are temporary and will not last long given that the core issues are not resolved. They have to clearly state how the funds were being managed, who was and is involved in the whole process.”

Lian believes that in order for Terra 2.0 forking to succeed, the project needs trust and transparency, which would ensure an upbeat outlook and speedy growth.

“Many people out in the market are just concerned about the price. The truth is no matter what the price is and how the fork is going to turn out, the more immediate thing to do is to stabilise the projects in their current ecosystem, let them migrate their dApps and apps to the new blockchain so that they do not have any downtime,” Lian added.

Note that price predictions can be wrong and shouldn’t be used as a substitute to your own research. You should always conduct your own due diligence. Keep in mind that cryptocurrencies are extremely volatile, and never invest or trade money you cannot afford to lose.

 

Original Source: https://capital.com/terra-luna-2-0

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”.

j j j