Last week’s undoing of the TerraUSD algorithmic stablecoin and its sister token Luna has ramifications for all of crypto.
of the TerraUSD algorithmic stablecoin and its sister token Luna has ramifications for all of crypto. First, there’s the immediate impact: the rapid collapse of a once-popular pair of cryptocurrencies sent a ripple effect across the industry, contributing to plummeting coin prices that wiped hundreds of billions of market value from the digital-asset market and stoked worries over the potential fragility of digital-asset ventures.
There were some winners in this scenario — like the investment firms including F9 Research that shorted TerraUSD . Stablecoins backed by reserves rather than algorithms also came off looking like better options. But it’s the losses from these bruising past few days that will resonate. Terraform Labs is working on another contingency plan in which ownership of the blockchain network would be distributed to investors, according to a blog entry posted Friday that was attributed to co-founder Do Kwon.
Castle Island Ventures’ Walsh said that later-stage companies are more likely to see valuation hits as they raise more funds because of their proximity to public markets, where stocks like Coinbase Global have plummeted. Coinbase stock slumped 35% this week and ended the week with a market value of $15-billion.
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