Crypto Market Overview May 11th | Dex-Trade
Do Kwon Develops Plan to Peel UST to USD
Yesterday's unprecedented breaking of the UST stablecoin peg from Terra to the US dollar continued today as both the "stable asset" and Terra's native coin, LUNA, crashed to all-time lows today. Do Kwon, founder of Terra and CEO of Terraform Labs, shared his plan to deal with the crisis. First of all, in order to save UST, it’s necessary to increase the burning of coins, which has so far been ineffective, since the asset could not reach dollar parity. At the moment, the stablecoin parity is 75% lower than the USD parity. In addition, in a thread under his tweet, Kwon suggested that his team increase the base pool from 50 million to 100 million SDRs and reduce PoolRecoveryBlock from 36 to 18. According to the coin developer, this move will increase mining power from $293 million to about $1.2 billion. But in parallel, the team will have to release four times more UST than usual. By the way, the intensification of coins issuance, which implies “creating value out of thin air”, has already become the reason for the creation a new cryptographic term — “Kwontative easing” (by analogy with “Quantitative easing”). As for the difficulties with the recovery of the coin, they were commented on by the head of portfolio management at Securitize Capital, Adil Abdulali: “Unlike other stablecoins such as USDC and Tether, UST is an ‘algorithmic’ stablecoin and is not backed by cash reserves. Comparatively, Circle ensures USDC stability with each USDCoin backed by one US Dollar, highlighting the importance of choosing the right stablecoin.”
AnchorIn Kentucky for the First Time There Was a House Purchase for BTC
According to the local news outlet Courier-Journal, a two-bedroom home was bought in Louisville, Kentucky, in the Iroquois area on May 9 for $65,000, which was converted into BTC and credited to the seller's account in just 8 seconds, while the commission per transaction was only $0.7. Real estate agent Ashley Brown, who was involved in the sale, said the final purchase price was "approximately 1 Bitcoin" after the commission, registration fee and ownership fee were paid in dollars. It’s not entirely clear how the recalculation was carried out, but at the time of publication, Bitcoin was worth approximately $31,600. By the way, according to Brown’s report, the sale took place back in February, but for some reason, the municipal authorities did not report real estate sales for crypto. However, this is not the first real estate transaction for Bitcoins in the world. A house in Braga, Portugal was sold for 3 BTC without even converting to euros. And this is not surprising, since many realtors and real estate investors are very supportive of crypto and often underestimate prices with confidence in the growth of the asset.
How does Microstrategy Protect its Bitcoin Reserves?
The CEO of software and business intelligence provider MicroStrategy, Michael Saylor, assured that the company will provide more coins to cover collateral during crisis events, and that crypto-gold must fall below $4,000 to jeopardize the company's collateral position. Recall that in March the company received a loan for the planned purchase of BTC in the amount of $205 million from Silvergate Bank. The move soon faced criticism from investors as they were concerned about the company's position in Bitcoin during margin calls. But it’s important to keep in mind that MicroStrategy spends both collateral and its own funds on the purchase of crypto. Speaking of margin calls. According to the company's chief financial officer, Phong Le, Bitcoin must fall to 21,000 for investors to receive a warning about the threat to assets. In addition, MicroStrategy currently holds 129,200 Bitcoins in reserve, while the Silvergate loan requires less than 20,000 Bitcoins as collateral. This means the company has over 100,000 BTC to secure the required $410 million in collateral.
