David Canellis


<p>Bankrupt crypto lender Voyager has almost finished liquidating its monumental crypto portfolio in a bid to make customers whole — but it still has about $166 million to go.</p>



<p>Blockworks compiled Arkham Intelligence data to recreate Voyager’s crypto holdings as of Jan. 1 — just days before it significantly ramped up deposits to crypto exchanges — to see exactly how the process has gone.</p>



<p>Voyager has so far pulled $433 million in stablecoins (mostly USDC and a small amount of USDT) from crypto exchanges Coinbase and Binance US year to date, having initially sent mountains of ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>), polygon (<a href="https://blockworks.co/price/matic" target="_blank" rel="noreferrer noopener">MATIC</a>) and shiba inu (<a href="https://blockworks.co/price/shib" target="_blank" rel="noreferrer noopener">SHIB</a>), among dozens of other tokens.</p>



<p>An additional $18.2 million USDC was received from market maker Wintermute, which also runs an over-the-counter trading desk. Voyager has sent Wintermute amounts of ETH, SHIB and MATIC, as well as smaller amounts of sushiswap (<a href="https://blockworks.co/price/sushi" target="_blank" rel="noreferrer noopener">SUSHI</a>), aave (<a href="https://blockworks.co/price/aave" target="_blank" rel="noreferrer noopener">AAVE</a>) and yield games guild (<a href="https://blockworks.co/price/ygg" target="_blank" rel="noreferrer noopener">YGG</a>).</p>



<p>(For the purposes of this report, crypto sent to exchanges is considered “sold.”)</p>



<p>Voyager at the start of the year:</p>



<ul class="wp-block-list">
<li>held about $546 million in Ethereum-bound crypto across dozens of tokens; with</li>



<li>ether making up 46% of those funds, followed by USDC (15%) and SHIB (13%); and</li>



<li>kept 187.7 million <a href="https://blockworks.co/price/vgx">VGX</a> (then worth $56 million), 10% of its Ethereum token portfolio.</li>
</ul>



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/13015203/embed#?secret=hyQfxyXY6S" data-secret="hyQfxyXY6S" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption"><em>Ether made up most of Voyager’s portfolio at the start of the year. Not anymore. | Chart by David Canellis</em></figcaption></figure>



<p>As well, 6,905.61 <a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a> ($171 million) sat in a Bitcoin <a href="https://bitinfocharts.com/bitcoin/address/12qA97T8hsDgvVoRCXGZifd9PCraqvd2DW" target="_blank" rel="noreferrer noopener">address</a> that once handled some Voyager withdrawals until Wednesday, when it was sent to an external address which has been <a href="https://github.com/VHRanger/tether/blob/main/data/known_addresses.json" target="_blank" rel="noreferrer noopener">linked</a> to Coinbase. It’s <a href="https://twitter.com/shingolavine/status/1605473013800980481" target="_blank" rel="noreferrer noopener">unconfirmed</a> whether the address belongs to Voyager’s estate, so it’s currently excluded from the charts. Blockworks has reached out to Voyager’s bankruptcy lawyers Kirkland &amp; Ellis for comment.</p>



<h2 class="wp-block-heading">Voyager already sold all its MATIC, worth $53M</h2>



<p><a href="https://blockworks.co/news/doj-binance-voyager-sec">Binance’s US arm has fought for the right to acquire Voyager’s assets</a>. The firm filed for bankruptcy last July under the weight of exposure to Three Arrows Capital and associated market volatility around that time, initially triggered by the demise of algorithmic stablecoin Terra.</p>



<p>Voyager said it had $1.3 billion in user crypto to liquidate at its first day bankruptcy hearing in July 2022, although an exact breakdown of its portfolio wasn’t provided. Considering the volatile and illiquid nature of some cryptocurrencies tied to Voyager’s estate, it’s likely their true value was much lower. Voyager also may have other assets on other blockchains not contained in this analysis.</p>



<p>Still, Voyager spent the following months hoovering crypto from various blockchain addresses to two primary Ethereum wallets. Initial estimates suggested Voyager has upwards of 100,000 creditors, to whom Voyager owes between $1 billion and $10 billion.</p>



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/13015352/embed#?secret=PIamYt3fw6" data-secret="PIamYt3fw6" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption"><em>Toggle the chart between total value sold to date and percentage of stake sold | Chart by David Canellis</em></figcaption></figure>



<p>As of this Wednesday, Voyager had 52,553 ETH ($86.7 million) left in its addresses, which means it has sent 75% of its initial ether stash for liquidation. And by raw number of tokens (not including stablecoins), Voyager addresses have sent almost 66% of all its cryptocurrency to exchanges so far this year.</p>



<p>The firm has already deposited all of its MATIC, BNB, ontology (ONT), ocean protocol (OCEAN), wrapped bitcoin (WBTC) and yearn finance (YFI) to exchanges, holdings which together were worth $42.5 million at the time of their outflows, nearly all of that MATIC.</p>



<h2 class="wp-block-heading">Loads of shiba inu still left to unwind</h2>



<p>Ether aside, Voyager’s largest non-stablecoin holdings are now SHIB and VGX. Its addresses started the year with 9 billion SHIB and 181.8 million VGX — worth $73 million and $54.3 million at the time, respectively.</p>



<p>Voyager has since sent almost 66% of its SHIB to exchanges, alongside 69% of its VGX. But thanks to increased crypto prices, Voyager’s remaining SHIB is still worth $32.6 million and its <a href="https://blockworks.co/news/bankrupt-issuers-tokens-survived" target="_blank" rel="noreferrer noopener">VGX</a> $18.2 million.&nbsp;</p>



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/13089230/embed#?secret=iPHjkaHyFJ" data-secret="iPHjkaHyFJ" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption"><em>Voyager has sent $53M VGX to exchanges, $18M left to go | Chart by David Canellis</em></figcaption></figure>



<p>VGX was intended as a utility token that also paid loyalty rewards. Users could pay for withdrawal fees and the like with VGX while earning tokens by referring new users, staking VGX and even as cashback rewards via Voyager’s debit card.&nbsp;</p>



<p>But with Voyager now defunct, VGX’s value proposition is effectively moot, much like <a href="https://blockworks.co/news/bankrupt-issuers-tokens-survived">other ‘zombie’ coins</a>.</p>



<p>So much selling might suggest that Voyager has been influencing token prices downward, but it doesn’t seem so.&nbsp;</p>



<p>Practically every token of which Voyager has offloaded a material amount of crypto has seen increased prices since Jan. 1, despite all the liquidations.&nbsp;</p>



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/13014850/embed#?secret=jPG9RM76Uj" data-secret="jPG9RM76Uj" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption"><em>Voyager’s ETH deposits to exchanges have ramped up over the past week | Chart by David Canellis</em></figcaption></figure>



<p>All in all, Voyager’s bankruptcy estate has done quite well. What was a near-$550-million crypto portfolio is now worth $700 million — after selling two-thirds of those assets.&nbsp;</p>



<p>And in a bear market, no less.</p>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<p><strong>Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.</strong></p>



<p><strong>Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.</strong></p>



<p><strong>Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.</strong></p>



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Voyager’s $500M Crypto Liquidation Is Almost Complete

Jon Rice


<p>According to a wallet analysis published by Crypto dot com CEO Kris Marszalek on his official Twitter feed, 20% of all reserves at the exchange are held in the highly speculative memecoin shiba inu (SHIB).</p>



<p>As fear of crypto contagion from the <a href="https://cms.blockworks.co/news/ftx-ceo-bankman-fried-resigns-bankruptcy-proceedings-begin/">FTX meltdown</a> spreads, Marszalek seems eager to prove that any exposure to the crisis is limited, and shared links to a Nansen dashboard that illustrate over $2 billion in reserves.</p>



<p> A Crypto dot com spokesperson said that “The reason our <a href="https://cms.blockworks.co/news/what-are-proof-of-reserves-and-can-they-build-back-trust/">Proof of Reserves</a> include Shiba is because we hold customers balances 1:1. Thus, our Proof of Reserves are dictated by our customer holdings.”</p>



<p>Bitcoin accounts for 30.67% of the total reserves, while ether is 17.32%. Only 11.99% of the reserves published are held in stablecoins USDC and USDT.</p>



<p>It’s the 19.77% of reserves held in SHIB that will raise eyebrows.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="551" height="415" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/11/SHIB-reservest-at-crypto-dot-com.jpg" alt="" class="wp-image-38507" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/11/SHIB-reservest-at-crypto-dot-com.jpg?w=551 551w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/SHIB-reservest-at-crypto-dot-com.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/SHIB-reservest-at-crypto-dot-com.jpg?w=341 341w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/SHIB-reservest-at-crypto-dot-com.jpg?w=347 347w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/SHIB-reservest-at-crypto-dot-com.jpg?w=291 291w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/SHIB-reservest-at-crypto-dot-com.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/SHIB-reservest-at-crypto-dot-com.jpg?w=50 50w" sizes="auto, (max-width: 551px) 100vw, 551px" /><figcaption>Image: Nansen</figcaption></figure></div>


<p>Each shiba inu token has a current value of $0.000000979 this morning, representing a market cap of $5.7 billion. CoinGecko data showed that Binance and Coinbase had trading volumes of around $32 million and $25 million respectively.</p>



<p><strong>Read more:</strong> <a href="https://cms.blockworks.co/news/what-are-proof-of-reserves-and-can-they-build-back-trust/">What Is Proof of Reserves and Can It Build Back Trust?</a></p>



<p>SHIB also <a href="https://cms.blockworks.co/news/shiba-inu-flips-solana-as-markets-play-bankman-fried-for-a-joke/">briefly flippened Solana’s token SOL</a> this week as market participants worried about the close ties of the Solana ecosystem to FTX and Alameda.</p>



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" src="https://flo.uri.sh/visualisation/11785379/embed#?secret=exsr7aDbUQ" data-secret="exsr7aDbUQ" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div></figure>



<p>Australian exchange CoinJar decided to delist CRO, the native token of Crypto dot com, earlier this week, explaining that &#8220;In light of recent events, we have decided that [Crypto dot com] Coin (CRO) no longer meets our listing requirements. Unfortunately, we have to take this action on short notice due to ongoing market volatility.&#8221;</p>



<p><em>Update: November 11 2022 4:42pm ET: Added quote from Crypto dot com spokesperson</em>, <em>contextual update.</em></p>



<p><em>Macauley Peterson and David Canellis contributed reporting.</em></p>



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<p><strong>Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.</strong></p>



<p><strong>Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.</strong></p>



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Funds Are SHIB? Crypto.com Reserves Are 20% Memecoin

Sam Martin

<div id="highlights-block_617725d07bf3f" class="highlights">
        <ul>
                <li>MKR price soars as Dai adoption picks up steam.</li>
                <li>LUNA nears an all-time high on a number of near- to medium-term catalysts.</li>
            </ul>
    
</div>



<p>There are three primary types of stablecoins; fiat-backed, overcollateralized and algorithmic.</p>



<p>The adoption of decentralized stablecoins, namely Dai and UST, has been increasing. </p>



<p>MakerDAO&#8217;s governance token, MKR, is on a tear as Dai adoption picks up. </p>



<p>LUNA is inching toward an all-time high on a number of near- to medium-term catalysts. </p>



<p>SHIB retraces on <a href="https://cms.blockworks.co/shiba-inu-owner-moves-2-76b-to-four-different-wallets/" target="_blank" rel="noreferrer noopener">news</a> that a wallet holding $5.7 billion of SHIB moved a large portion of the funds into four different wallets, likely to be sold.</p>



<p>NFTs tread water as the assets they are priced in continue to race higher. </p>



<h3 class="wp-block-heading"><strong>Latest in Macro:</strong></h3>



<ul class="wp-block-list"><li>S&amp;P 500: 4,660, +.65%</li><li>NASDAQ: 15,811, +1.04%</li><li>Gold: $1,770, -.42%</li><li>WTI Crude Oil: $80.11, -4.53%</li><li>10-Year Treasury: 1.603%, +.067%</li></ul>



<h3 class="wp-block-heading"><strong>Latest in Crypto:</strong></h3>



<ul class="wp-block-list"><li>BTC: $63,204, +.40%</li><li>ETH: $4,615, +2.12%</li><li>ETH/BTC: .0730, +.60%</li><li>BTC.D: 43.32%, -.88%</li></ul>



<h3 class="wp-block-heading">DAI and UST adoption continues</h3>



<p>Stablecoins are a form of digital asset that aim to peg their market value to an external reference such as the US dollar. Some of their main use cases include interacting with different applications in DeFi or for remittance payments. </p>



<p>The stablecoin market has grown to nearly $128 billion, representing an increase of roughly 500% over the last 12 months, according to a <a href="https://home.treasury.gov/system/files/136/StableCoinReport_Nov1_508.pdf" target="_blank" rel="noreferrer noopener">report</a> released by the US Treasury earlier this week. </p>



<p>There are three main categories of stablecoins:</p>



<ul class="wp-block-list"><li><strong>Fiat-backed</strong><ul><li>The two largest stablecoins, USDC and USDT, are fiat-backed stablecoins issued by the companies Circle and Tether respectively. Theoretically these companies hold $1 of reserves for every 1 USDC/USDT that is issued so that holders of the tokens have redemption rights.<ul><li>Some problems with fiat-backed stablecoins include: trusting that a centralized entity does in fact hold the reserves they claim and holders being subject to censorship by governments wherever they are domiciled. </li></ul></li></ul></li><li><strong>Overcollateralized</strong><ul><li>For every stablecoin that is minted into the market, there is overcollateralization of various crypto assets to back it. The peg is maintained through arbitraging opportunities. Borrowers who mint overcollateralized stablecoins must maintain a minimum amount of collateral in USD terms in order to avoid being liquidated. <ul><li>Some problems with these types of stablecoins include: they can only be minted if the market has an appetite to borrow against their assets, which may not be able to match the parabolic demand stablecoins have seen to date. Also, the stablecoin is only as good as the collateral that backs it. </li></ul></li></ul></li><li><strong>Algorithmic</strong><ul><li>With this type of stablecoin, on-chain incentives ensure the stablecoin maintains its price peg. There is no outside collateral backing these stablecoins and they are highly experimental. <ul><li>One of the main problems with algorithmic stablecoins is if the on-chain incentives fail, the stablecoin could be de-pegged and potentially go to zero.   </li></ul></li></ul></li></ul>



<h3 class="wp-block-heading">MKR and Dai</h3>



<p>Dai is an overcollateralized stablecoin native to MakerDAO (MKR). It is the largest decentralized stablecoin and can be minted on <a href="https://oasis.app" target="_blank" rel="noreferrer noopener">Oasis</a> by connecting a wallet and posting a digital asset as collateral.  </p>



<p>The total Dai supply sits at 8.13 billion, which marks an increase of 672% over the last 12 months. </p>



<p>Critics say that it is not sufficiently decentralized because a large portion of the collateral used to generate Dai is USDC, a fiat-backed stablecoin referenced earlier. However, USDC now only makes up 33.4% of Dai collateral, down from over 50% months earlier, <a href="https://decrypt.co/84958/ethereum-primary-collateral-decentralized-stablecoin-dai" target="_blank" rel="noreferrer noopener">according</a> to writer Emily Tonelli.  </p>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="562" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.07.43-PM-1024x562.png" alt="" class="wp-image-10388" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.07.43-PM-1024x562.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.07.43-PM-1024x562.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.07.43-PM-1024x562.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.07.43-PM-1024x562.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.07.43-PM-1024x562.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.07.43-PM-1024x562.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.07.43-PM-1024x562.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.07.43-PM-1024x562.png?w=1032 1032w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Source: daistats.com</figcaption></figure>



<h4 class="wp-block-heading">MRK revenues</h4>



<p>MKR&#8217;s revenues are derived from three main sources, <a href="https://messari.io/article/makerdao-valuation" target="_blank" rel="noreferrer noopener">according</a> to a Messari report:</p>



<ol class="wp-block-list"><li>Interest revenues from overcollateralized loans</li><li>Liquidation revenues from fees charged on liquidated vaults</li><li>Stablecoin trading fees from the Price Stability Module (PSM)</li></ol>



<p>The report continues by explaining how the income generated by the Maker protocol indirectly accrues to token holders. Currently, cash flows are used for three main purposes being:</p>



<ol class="wp-block-list"><li>Covering the protocol’s development and operational costs</li><li>Building a safety buffer to cover potential liquidation losses (a.k.a. surplus buffer)</li><li>Buying and burning MKR tokens out of circulation</li></ol>



<p>The MKR token is therefore a beneficiary of further Dai adoption. As the Dai supply expands, the revenues generated should also increase barring any changes to the protocol:</p>



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="802" height="611" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.26.37-PM.png" alt="" class="wp-image-10390" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.26.37-PM.png?w=802 802w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.26.37-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.26.37-PM.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.26.37-PM.png?w=337 337w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.26.37-PM.png?w=343 343w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.26.37-PM.png?w=287 287w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-4.26.37-PM.png?w=80 80w" sizes="auto, (max-width: 802px) 100vw, 802px" /><figcaption>Source: Token Terminal</figcaption></figure></div>



<p>Sam MacPherson, a protocol engineer at MakerDAO, took to <a href="https://twitter.com/hexonaut/status/1455507332469821440?s=20" target="_blank" rel="noreferrer noopener">Twitter</a> to announce the D3M initiative which will give one of the largest borrowing and lending protocols on Ethereum, Aave, privileged access to mint Dai once the test debt ceiling is raised. This has MakerDAO enthusiasts excited about Dai expansion and further price appreciation of its governance token: MKR. </p>



<p>The MKR token was last trading at $3,190, up 32.66% over the last five days.</p>



<h3 class="wp-block-heading">LUNA and UST</h3>



<p>Terra&#8217;s largest stablecoin, UST, is algorithmic. There is no collateral backing UST other than its reserve token, LUNA, which has a fixed supply. Whenever one UST is minted, one dollar worth of LUNA must be burnt.</p>



<p>&#8220;LUNA helps to maintain UST’s peg to the dollar by an arbitrage mechanism. Whenever UST trades above the peg, users can send 1 dollar worth of LUNA to the system and receive 1 UST,&#8221; according to a Messari <a href="https://messari.io/article/terra-the-defi-giant-reaching-mainstream-adoption" target="_blank" rel="noreferrer noopener">report</a>. &#8220;Conversely, when UST trades below the peg, users can send 1 UST to the system to receive 1 dollar worth of LUNA. In both cases, users are incentivized to arbitrage and help maintain UST’s peg to the dollar.&#8221;</p>



<p>Due to the fact that LUNA is burned in order to mint UST, LUNA holders relentlessly push for further adoption of UST. </p>



<p>UST has experienced explosive growth, climbing to a circulating market cap of over $2.8 billion. But during spikes of volatility in crypto markets, the stablecoin has lost its peg as seen in the chart below:</p>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="521" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/UST_Circulating-Marketcap_2021-11-03-1024x521.png" alt="" class="wp-image-10391" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/UST_Circulating-Marketcap_2021-11-03-1024x521.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/UST_Circulating-Marketcap_2021-11-03-1024x521.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/UST_Circulating-Marketcap_2021-11-03-1024x521.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/UST_Circulating-Marketcap_2021-11-03-1024x521.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/UST_Circulating-Marketcap_2021-11-03-1024x521.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/UST_Circulating-Marketcap_2021-11-03-1024x521.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/UST_Circulating-Marketcap_2021-11-03-1024x521.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/UST_Circulating-Marketcap_2021-11-03-1024x521.png?w=1215 1215w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Messari</figcaption></figure>



<p>In May of 2021 when digital assets crashed, UST holders were spooked and there was a roughly 25% contraction in the circulating supply which led the price of UST to drop below its $1 peg. </p>



<p>This type of bank run on algorithmic stablecoins is often referred to as a &#8220;death spiral,&#8221; where the entire economy crashes to zero. This has happened to numerous algorithmic stablecoins in the past.</p>



<p>&#8220;The reason why Terra has been resilient during market contractions is because there is a vibrant economy that is being built on the Terra blockchain and I think that&#8217;s the best defense that algorithmic stablecoins can have against death spirals,&#8221; said Do Kwon, co-founder of Terra, in a <a href="https://members.delphidigital.io/reports/terra-autumn-series-ep-1-kickstarting-terra-autumn-with-do-kwon/" target="_blank" rel="noreferrer noopener">podcast</a>. </p>



<h3 class="wp-block-heading">LUNA nears ATH on bullish catalysts</h3>



<ul class="wp-block-list"><li>UST supply expansion which was previously discussed.</li><li>MIM&#8217;s UST Degenbox is set to roll out soon, according to a medium <a href="https://abracadabramoney.medium.com/our-ust-strategy-the-first-application-of-the-magic-potentialities-of-degenbox-ea35f13d6b5e" target="_blank" rel="noreferrer noopener">article</a> by Abracadabra.Money.</li><li><a href="https://anchorprotocol.com" target="_blank" rel="noreferrer noopener">Anchor protocol</a> offering a 19.5% fixed APY on UST deposits.</li><li><a href="https://terra.smartstake.io/history" target="_blank" rel="noreferrer noopener">283.05 million</a> LUNA are staked out of the 399.88 million circulating supply, making 70.7% of the circulating supply illiquid.</li><li>A pending <a href="https://agora.terra.money/t/communitypoolspendproposal-burn-pre-col5-community-pool/2429" target="_blank" rel="noreferrer noopener">proposal</a> to burn roughly 10% of the LUNA supply from the community pool to bootstrap UST liquidity for an insurance protocol called Ozone. This would mark one of the largest burns of a major protocol to date.</li><li>A recent <a href="https://twitter.com/chjango/status/1453860654893305861?s=20" target="_blank" rel="noreferrer noopener">interview</a> with Do Kwon where he states there are plans to create a stability augmentation platform with $1 billion worth of BTC to back LUNA with the most pristine collateral in the digital asset realm. </li></ul>



<p>There are also numerous protocols launching on Terra in the coming months which many expect will drive organic demand for UST, and thus lead to more LUNA being burned. There are too many projects to go into detail here, but the following Twitter thread provides a detailed overview:</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">Few realise it, but <a href="https://twitter.com/hashtag/TerraAutumn?src=hash&amp;ref_src=twsrc%5Etfw">#TerraAutumn</a> is coming 🌖🍂<br><br>The pieces will start falling into place once Columbus 5 goes live in late September<br><br>In this thread, I share my mental model for <a href="https://twitter.com/terra_money?ref_src=twsrc%5Etfw">@terra_money</a> and guide to the end of year setup as I see it 👇</p>&mdash; José Maria Macedo (@ZeMariaMacedo) <a href="https://twitter.com/ZeMariaMacedo/status/1435654966585200645?ref_src=twsrc%5Etfw">September 8, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>As a result, <a href="https://coinmarketcap.com/currencies/terra-luna/" target="_blank" rel="noreferrer noopener">LUNA</a> is nearing an all-time high, last trading at $48.27. It is up 18.41% over the last seven days.</p>



<h3 class="wp-block-heading">Shiba Inu retraces its steps</h3>



<p>SHIB was last trading down 15.45% on <a href="https://cms.blockworks.co/shiba-inu-owner-moves-2-76b-to-four-different-wallets/" target="_blank" rel="noreferrer noopener">news</a> that a wallet holding $5.7 billion of SHIB moved a large portion of the funds in four different wallets, likely to be sold.</p>



<p>DOGE has reclaimed its spot as the top dog in the world of crypto. SHIB is the eleventh largest cryptocurrency with a market cap of $33.71 billion. DOGE is the ninth largest cryptocurrency with a market cap of $35.53 billion.</p>



<h3 class="wp-block-heading">Non-Fungible Tokens (NFTs)</h3>



<p>Trading data from <a href="https://opensea.io/rankings" target="_blank" rel="noreferrer noopener">OpenSea</a> and <a href="https://solanalysis.com" target="_blank" rel="noreferrer noopener">Solanalysis</a> of some of the top Solana and Ethereum projects can be found in the photos below:</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="334" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.37-PM-1024x334.png" alt="" class="wp-image-10406" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.37-PM-1024x334.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.37-PM-1024x334.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.37-PM-1024x334.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.37-PM-1024x334.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.37-PM-1024x334.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.37-PM-1024x334.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.37-PM-1024x334.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.37-PM-1024x334.png?w=1240 1240w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Top Ethereum Projects</figcaption></figure></div>



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="290" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.23-PM-1024x290.png" alt="" class="wp-image-10405" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.23-PM-1024x290.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.23-PM-1024x290.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.23-PM-1024x290.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.23-PM-1024x290.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.23-PM-1024x290.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.23-PM-1024x290.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.23-PM-1024x290.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-03-at-5.50.23-PM-1024x290.png?w=1221 1221w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Top Solana Projects </figcaption></figure></div>



<p>If you made it this far, thanks for reading! I am looking forward to catching up tomorrow.</p>



<hr class="wp-block-separator"/>



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