ReFi Roundup #16: Terra collapse, ReFi Portugal & Earth Day Hackathon Retro!
With the dust of the Terra Ponzi scheme beginning to settle, we wanted to take a chance to look at what happened, what this means for ReFi and why this movement is essential to the success of web3 as a whole.
Hello ReFi peeps!👋 Jeremy here with my first edition of the Roundup. I'm a serial entrepreneur with a passion for regeneration. Currently, I'm working on a project called Re:Source that is pioneering on-chain regenerative villages in Portugal.
Many thanks to jE for editorial support and fleshing out some of the narrative!
Terra Ponzi collapse
It seems some stable coins aren’t as stable as they are supposed to be, casting doubt across the whole crypto space. The big takeaway here is that not all stablecoins are created equally.
Yet another algorithmic stable coin experiment has failed, this time causing over $90B in losses in just under a week. This triggered a broader market meltdown with losses across the board.
Our hearts go out to everyone who lost money in this process. If you or anyone you know is suffering, please feel free to reach out! We're a community that cares and are always happy to listen or put you in touch with experts who can help.
TerraUSD (USDT) and its sister coin LUNA suffered a 99.9% drop in just under seven days... The mass market sell off also exposed the Cosmos ecosystem and had serious ripple effects across the entire crypto market. This happened as a result of several factors:
- USDT was a grossly under-collateralized stable coin.
- The Luna Foundation Guard (LFG) began buying Bitcoin to provide collateral to mitigate the risk of USDT losing it's peg
- USDT had reduced liquidity as a result of the migration to a 4pool Curve liquidity pool, designed to 'win the curve wars'
- USDT and Luna had grown explosively through the unsustainable 20% yield offered by Anchor protocol.
- Anchor reduced it's yield and as many predicted, triggered a huge sell off of UST.
- Additionally, a trader (or attacker—if you wish), borrowed 100k Bitcoin and bought over 1B of USDT directly from the LFG and proceeded to sell USDT in large chunks, beginning with a 350M sale on Curve, followed by 200k - 5M sales on Binance
- USDT lost it's peg and forced the LFG to sell off it's Bitcoin reserves to try and buy back USDT.
- This triggered massive sell-off across the Terra ecosystem, with many redeeming USDT for LUNA and selling for exit.
- Many retail investors got rekt as most institutional funds were able to exit in time.
For a deeper dive, check out Ben Giove's analysis on Bankless.
Crypto winter 🥶
Overall, the entire crypto market has been slashed by more than half since November, falling to $1.2 trillion from $2.9 trillion, according to data from CoinMarketCap.
As a result of the Luna crash landing, the ReFi space got hit harder this week with impact related chains like Regen who saw a 35% drop. IXO was down a massive 64%, Celo fell by 38% and Toucan protocol’s BCT dropped 13%.
DAOs like Klima, Gitcoin, EarthFund and Popcorn took a hard tumble between 30-50%.
ReFi Twitter seems to hope that as the lessons emerge from the LUNA disaster, we could see a positive shift for ReFi—as investors choose to deploy their capital into currencies backed by tangible assets instead.
Natural capital backed currencies
Despite the shock of the collapse of the Terra ecosystem, there is a trend emerging in established stablecoin communities like Maker DAO and Celo as well as up and coming projects like Ecorise and Kumo DAO looking to create stablecoins backed by natural capital assets.
In the case of Terra—imagine if their community had decided to aggressively buy forests at risk of degradation in order to back their stable coin?
Land tends to be a less correlated asset to the broader crypto market and provides real world value.
ReFi Portugal May 26
ReFi Portugal is hosting a ReFi Spring event on May 26 at the Traditional Dream Factory, a pioneering regenerative village where Regens can learn about the application of ReFi protocols in a real-world context. They're combining communities of on the ground regeneration with web3 experts.
We're expecting this to be a real celebration of hope and human ingenuity. You can read more and buy your tickets here.
A smattering of whats been twittered
Celo + Flow Carbon Partner for GNT Launch
Celo Foundation and Climate Collective have agreed to purchase at least $10M worth of Flow Carbon's Goddess Nature Token (GNT) and support liquidity for carbon trading on Celo.
Celo Camp Batch 5 Kicking Off!
Meet the 30 impressive teams, including several members of the ReFi DAO community: Closer, Aethena Protocol, Climate Guardians, and Flowcarbon.
Pozzle Planet Astr0 0NFTs
Pozzle Planet announces the ‘Astr0 Zer0s’ NFT collection, described as the first utility NFT on Layer0 with IPY. It allows for token launches to reduce token selling pressure and solves liquidity for the early investor, while Astr0s contain unique properties by embedding bonuses into the NFTs.
Ecorise $RISE token launch postponed
As featured in our last ReFi Roundup, the Ecorise $RISE token launch has had to be delayed in light of the recent crash.
Toucan Provides Major BCT Upgrade
Toucan has taken important steps to improve the integrity of on-chain credits in the Base Carbon Tonne (BCT) pool. Each credit now needs to have <10 years between the vintage year and the issuance of the resulting carbon credit.
BICOWG + White House Public Comment
The White House made a formal request for info on the Climate Implications of Digital Assets, and The Blockchain Infrastructure Carbon Offset Working Group (BICOWG) responded making calls for new positively reinforcing regulation for refi, alongside active support and open dialogue with expert advisory. This is the first time the nascent #ReFi industry engages directly with federal policymaking.
Solid World $2.3M Funding!
SolidWorldDAO has secured $2.3 million in funding to build pools for pre-purchasing carbon credits. They utilise blockchain technology to tokenize carbon credit pre-purchase agreements.
Earth Day Retro: Planet Positive NFT Hackathon
The planet positive NFT hackathon was a week-long event with $20,000 in bounties. It was a global virtual event that focused on collaboration to address a handful of challenges set by sponsors.
In last week's ReFi Roundup, we gave a snapshot of the ReFi DAO NFT Hackathon. Today, we wanted to take time to do a little retrospective and share in greater detail what happened, how it worked and why the story of planet positive NFTs is so important for addressing climate change.
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