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News summary 5/31 : Terra, Uniswap, a16z, Coinbase, Elon Musk

Terra 2.0 was launched on Saturday. Uniswap reached a trillion-dollar trading volume. A16z sets up a $4.5 billion investment fund for cryptos. Coinbase share plunges after weak Q1-2022 results. Elon Musk caused the Dogecoin price to rise with his Twitter comments.

Terra’s new blockchain launched

The Terra platform continues to make headlines. This time the news is about the new Terra commonly referred to as Terra 2.0.

A week ago we reported on Prop 1623 to save Terra. The idea was to create a new blockchain instead of a hard fork and start from scratch. The vote on this rescue package ended on Thursday last week. The result was 65% in favor.

Most members of the community want to give Terra another chance. Therefore Terra 2.0 was launched last Saturday.

Somewhat surprisingly, Terra 2.0 received very broad support from the largest cryptocurrency exchanges in the market. Binance, FTX, KuCoin, Kraken, and many others quickly listed Terra 2.0. This basically means a new Luna token.

When Terra 2.0 was launched, the old ecosystem was renamed Terra Classic. At the same time, the old Luna token became Luna Classic (ticker: LUNC). The new Luna token got the LUNA ticker. It did not get off to a particularly strong start, with the token’s price plummeting by around 70% on Saturday. The price has since stabilized at approximately six dollars.

The controversy around Terra will certainly not stop there. The popular Terra DeFi app, Mirror Protocol, is one example. It was revealed last week that a bug in Mirror enabled a $90 million hack six months ago! On top of this, Mirror is again in trouble due to validator bugs and even threatens to crash completely.

The South Korean authorities are also interested in Terra’s activities. Social media is full of rumors about Terra’s background and the reasons for the collapse. Time will tell what will eventually come out of the incident.

At the moment, it is difficult to predict the success of the Terra 2.0 project. Its competitive advantage has been lost as there are no longer algorithmic stablecoins in the new blockchain. In addition, the name is also a historical ballast. Thousands of investors are also trying to dump Luna on the market trying to get back at least some of their losses.

Uniswap broke the trillion-dollar trading volume

Uniswap is one of the most popular DeFi applications in the market. It is a DEX (decentralized exchange). Originally built on Ethereum, the app has now expanded to Ethereum scaling solutions such as Polygon.

Uniswap’s UNI token is almost 90% down from ATH. However, this has no direct correlation with Uniswap’s success. It continues to dominate the DEX market and reached a significant milestone last week. More than a trillion dollars has now been traded on the exchange.

As the graphic in the tweet shows, the trading volume has been on the rise since early 2021. Volumes have been hovering between $45-80 billion on a monthly basis. This translates to around $1.5-2.5 billion per day. With these figures, Uniswap would be right up there with the largest exchanges on the market (excluding Binance).

Uniswap’s market share has also stabilized in the 60-70% range over the past 1.5 years. Uniswap’s share of users in the entire DeFi sector is even higher.

If the data looks so good, why is Uniswap’s own token not doing so well? The reason is the type of token. Uniswap, like other DeFi tokens, is a governance token. UNI token is therefore not used while trading on Uniswap. Holding it only gives you the power to decide on the development of the protocol.

We have seen similar developments from other DeFi tokens. Even a large increase in liquidity doesn’t drive up the price of governance tokens. Time will tell whether DeFi tokens will get a new boost at some point. At the moment they look like a very poor investment.

A16z launches a $4.5 billion crypto fund

The name Andreessen Horowitz is familiar to anyone who actively follows the crypto industry. The long name is often abbreviated in the news as a16z. It is the best-known venture capital (VC) firm investing in the crypto market. This refers to an investment firm that provides venture capital to early-stage projects.

Andreessen Horowitz has $30 billion AUM (assets under management). The company has a separate crypto fund, a16zcrypto. It is an investor in many of the industry’s best-known projects including Coinbase, Opensea, Uniswap, and Yuga Labs.

To hear a16z’s thoughts on the market, check out the latest episode of the Bankless podcast.

Last week there was some interesting news about a16zcrypto. The company announced that it is setting up a $4.5 billion investment fund! It will target all the hottest areas of the crypto sector:

The firm is specifically “excited” about the latest advancement in sectors including Web3 games, decentralized finance (DeFi), decentralized social media, self-sovereign identity, layer-1, and layer-2 infrastructure, DAOs and governance, NFT communities, privacy, creator monetization, regenerative finance (ReFi), new applications of ZK proofs, decentralized content and story creation, and many other areas.

This is the comment of one of the partners of a16z, Chris Dixon. He is one of the interviewees in the video above.

The new fund brings a16zcrypto’s total crypto investments to as much as $7.6 billion. Above all, it sends a strong signal to the market and crypto skeptics. Even though the sector is in a bear market and many Web3 and DeFi tokens are down 90% from their highs, a16z has a very strong belief in the future of cryptos.

“We think we are now entering the golden era of web3”, Chris Dixon says. If you are not yet familiar with the term Web3, check out this beginner’s guide.

Coinbase stock price has plunged in 2022

There are now many ways to invest in cryptocurrencies. You can buy bitcoins directly or invest in different cryptos through futures, trackers, or ETF products. The traditional stock market offers more and more options, with many companies already listed in the US.

The best known is probably Michael Saylor’s Microstrategy. There are also a number of different companies in the mining sector. The crypto exchange Coinbase is also an attractive option. Or is it?

At a glance, you would think that a company like Coinbase would hold its share price better than Bitcoin. Exchanges make money based on the trading volume regardless of the prices. In practice, however, Coinbase (ticker: COIN) has plunged even worse than many cryptocurrencies.

coin chart

COIN has fallen by 70% in 2022, considerably more than Bitcoin.

The situation looked good three months ago. Coinbase published a surprisingly good Q4-2021 report. Its figures seemed incredible considering the situation of the market and especially the exit of retail users months earlier.

The report gave the company a small boost, but the stock has since fallen behind the rest of the market. The Q1-2022 results released a couple of weeks ago did not make the situation any better.

coinbase q2

The trading volume was lower than in any quarter of 2021, and the number of users also fell sharply from the peak in Q4-2021. Investors were most spooked by the company’s net income, which plummeted more than $400 million into the red.

The stock fell to nearly $40 but has since recovered to its current price of $75. Even that is still a long way from the ATH of $430.

The biggest factor in Coinbase’s figures is the overall market situation of cryptos. A large number of retail investors have been gone for an extended period of time. Costs have increased due to investments and recruitments in 2021. In addition, the launch of the NFT marketplace had bad timing.

Coinbase can be an attractive investment if you are assessing stocks that will rise sharply in the next bull run.

Elon Musk gave Dogecoin a momentary boost

Elon Musk is famous for pumping up the Dogecoin price. He has taken DOGE up on numerous occasions, either intentionally or unintentionally. The reason is almost always Musk’s comments on Twitter. This was also the case last week.

Musk had previously announced that certain products in the Tesla shop can be purchased with Dogecoins. Now he has made a similar announcement about SpaceX. This is the space technology company behind Starlink.

Starlink enables internet access via satellite in areas where traditional mobile and internet networks are not available. Starlink has also played a very important role in Ukraine. Dogecoin can also be a means of payment for using Starlink. “Maybe one day,” Musk commented on the topic.

Elon Musk has also been in the spotlight this year for his Twitter investments. The controversial deal is currently on hold because Musk is demanding an explanation from Twitter about the number of so-called bot accounts. He suspects there are more bots among Twitter users than Twitter’s official figures show.

Dogecoin is also likely to have some role on Twitter if the deal eventually goes through.


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