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Terra-based lending protocol Anchor saw more than $1 billion in liquidations last week, the largest liquidation event for a single protocol. This happened as both the crypto market collapsed and the Terra project — including its tokens luna (LUNA) and TerraUSD (UST) — largely collapsed.

According to The Block’s Data Dashboard, $1.048 billion worth of staked crypto collateral deposited by borrowers on Anchor was liquidated on the platform between May 7 and May 12.

Luna (LUNA) accounted for over $750 million — or close to 75% of the liquidations — on Anchor during the period. Liquidations of avalanche (AVAX) came in at $261 million, with the remainder spread across ether (ETH), solana (SOL), and cosmos (ATOM).

The last time a large liquidation event like this happened was a year ago. This was when DeFi lenders Compound and Aave saw a total of $633 million in liquidations amid a general market crash at the time.

What caused this?

In Anchor’s case, the crash of UST was the main instigator. To understand how it happened, we need to know how Anchor worked.

Anchor is a lending platform on the Terra ecosystem. Users can borrow from Anchor by putting up collateral in the form of bonded crypto assets, which can be LUNA, ETH, AVAX, SOL, or ATOM.

Borrowing on Anchor is at a 10% interest rate and borrowers can take loans of up to 60% of the collateral they deposit on the platform. Anchor provides these loans in the form of the UST stablecoin. Liquidations occur on Anchor when the value of the staked collateral falls to a certain point that exceeds the threshold required to pay back the loan.

Luna lost almost 99% of its value during this period of liquidations, falling from $73 to as low as $0.83. The other assets offered as collateral also dropped in value.

Borrowers who deposited Luna as collateral saw their positions become increasingly at risk as the price of the coin fell last week. The same also applied to borrowers who put the other assets as those tokens began to plunge amid a wider crypto market downturn.

Anchor liquidations during last week’s market crash. Source: The Block Research.

When the value of the tokens used as collateral fell low enough, it meant that the positions had became underwater and were able to be liquidated. The above image shows that the bulk of the Luna liquidations occured between May 9 and May 10, when the price of the coin was in free fall.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

An explosion last week at the substation of a bitcoin mining facility in Niagara Falls, New York led to a fire and caused thousands of machines to go offline.

The facility where the incident happened, on May 10, is owned by Blockfusion, which offers colocation services to miners.

One of their clients, Bit Digital, said Thursday that power was cut off to about 2,515 of their Bitcoin miners and approximately 710 Ethereum miners that had been operating at the site.

“Operations are hoped to resume within a few weeks, but at this time there can be no assurances as to timing,” the company said. “Blockfusion is working with its insurer and the utility to restore power as quickly as possible.”

Per Bit Digital, no one was injured during the incident and there were no significant damages to the mining center building or to Bit Digital’s miners.

Per Bit Digital’s statement: “The explosion and fire are believed to have been caused by faulty equipment owned by the power utility. Blockfusion and the Company intend to pursue claims including seeking reimbursement for lost revenue.”

About 1,580 Bit Digital miners operating at a different location in New York also recently got their power cut. Their hosting partner at that location, Digihost Technology, said that they needed additional approvals from power authorities.

Bit Digital said the two incidents combined cut its operating hash rate to 46.8%.

“This is expected to have a material adverse effect on our operating results until such matters are resolved,” it said.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Anxieties about broader market conditions and the meltdown of TerraUSD (UST) have sent traders fleeing from the cryptocurrency space, triggering fears that the decline in prices in the nascent market could have a spillover impact on the US economy. 

Those fears are overblown — at least, according to one research note sent out to clients by Goldman Sachs. 

A group of the bank’s researchers, led by Joseph Briggs, said that any impact of the crypto markets slide on US spending should be very small since “the recent decline is very small relative to US household net worth.”

Bitcoin’s price is down more than 35% since the beginning of the year. 

As per the bank, cryptocurrency holdings as a percentage of net worth represent a mere 0.3% of US household net worth compared to 29% for US equities.  

According to the bank’s researchers: 

“While there is admittedly a lot of uncertainty around our assumptions—for example, it’s unclear whether the propensity to spend out of crypto holdings will ultimately be larger or smaller than for equities and other asset classes—our results strongly suggest that the crypto impact will be marginal relative to other factors.”

The bank added that the impact on the US labor force participation rate should also be muted given that the participation of young men in the labor force — “the demographic group that is the most likely to be affected by the crypto pullback” — is currently at pre-pandemic levels. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Terraform Labs CEO Do Kwon has amended his proposal to revive the Terra blockchain — in the middle of a vote on whether it should be implemented. 

After the implosion of the TerraUSD (UST) stablecoin, Terraform Labs CEO Do Kwon suggested a “rebirth” plan in which he proposed creating Luna (LUNA) 2.0 tokens on a new blockchain.

Today he amended the proposal despite the fact the original plan is currently going through an on-chain vote. While this so-called “rebirth” proposal still stands, Kwon stated he edited a few distribution parameters “to accommodate community feedback.”

The first change reduces the distribution of LUNA 2.0 tokens to UST holders who has their tokens staked on Anchor when the depeg occurred. Their distribution share was reduced from 20% to 15%.

Second, Kwon altered the vesting schedule for two of the stakeholder categories that have been proposed to receive a share of the new tokens. Here, Kwon increased the initial token unlocks of allocations of LUNA 2.0 tokens from 15% to 30% — with the remaining 70% locked for a two-year vesting period.

It’s unusual for a proposal to be amended amid an on-chain vote. This is why today’s changes from Kwon have led some to question its validity. Usually, whenever there is a change made to a proposal, it’s done beforehand and not during the vote. FatMan, an anonymous Terra analyst and commentator, highlighted the fact that a new proposal should come with a fresh vote.

“How can you make significant amendments to a proposal *mid-vote* when most people have already voted (for the original document)?,” FatMan said. He added that “significant changes should be posted as a brand new proposal.”

Kwon’s original proposal went to a validator vote on Wednesday. At the time of writing, a large majority of votes (80%) are in favor of it, with only 15% that are opposed to it with a veto. It’s too early to say if the vote for Kwon’s proposal will pass given there are five more days to go. If the ‘no with veto’ percentage crosses the 33.4%, the entire proposal would be scrapped despite the fact it has majority support from validators. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Episode 44 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Bill Barhydt, CEO of Abra.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests to podcast@theblockcrypto.com.

As the crypto market matures, owners of “pristine” digital assets will increasingly be able to use their holdings as collateral for an array of financial services, according to Bill Barhydt, CEO of Abra.

Founded in 2014, crypto wealth management platform Abra closed a $55 million Series C last September led by IGNIA and Blockchain Capital.

In this episode of The Scoop, Barhydt explains why the recent Terra blow-up has no impact on crypto’s disruptive potential, and how a new wave of crypto-backed financial products promises to unlock more utility for long-term holders.

As Barhydt explains,

“Most banks won’t recognize crypto — I don’t even know any that will recognize crypto when they’re trying to figure out your financial status, when you’re trying to qualify for a mortgage…”

Just last month, Abra announced a partnership with Propy — the company who sold a Florida home for $650,000 using an NFT — allowing crypto holders to apply for loans using their crypto as collateral.

While Abra is “not financing homes yet,” allowing long-term crypto holders to use their digital assets as collateral for down payments on property is a sign of maturity for the asset class, according to Barhydt.

If crypto can become pristine digital collateral like Barhydt imagines, he believes the implications will be felt around the world:

“The banking system knows that I have this much bitcoin, it lends me this amount of money to complete my payments, and that’s debited later — that’s a much more efficient way to process credit transactions in countries where there is no credit scoring system, which is most countries, so having a kind of digital collateral changes everything.”

During this episode, Chaparro and Barhydt also discuss:

• Decentralization and systemic risk
• The importance of research before investing
• Crypto narratives worth watching

This episode is brought to you by our sponsors Fireblocks, Coinbase Prime & Cross River
Fireblocks is an enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. Fireblocks enables exchanges, lending desks, custodians, banks, trading desks, and hedge funds to securely scale digital asset operations through the Fireblocks Network and MPC-based Wallet Infrastructure. Fireblocks serves over 725 financial institutions, has secured the transfer of over $1.5 trillion in digital assets, and has a unique insurance policy that covers assets in storage & transit. For more information, please visit www.fireblocks.com.

About Coinbase Prime
Coinbase Prime is an integrated solution that provides institutional investors with an advanced trading platform, secure custody, and prime services to manage all their crypto assets in one place. Coinbase Prime fully integrates crypto trading and custody on a single platform, and gives clients the best all-in pricing in their network using their proprietary Smart Order Router and algorithmic execution. For more information, visit www.coinbase.com/prime.

About Cross River
Cross River is powering today’s most innovative crypto companies, with banking and payments solutions you can rely on, including fiat on/off ramp solutions. Whether you are a crypto exchange, NFT marketplace, or wallet, Cross River’s API-based, all-in-one platform enables banking as a service, ACH & wire transfers, push-to-card disbursements, real-time payments, and virtual accounts and subledgers. Request your fiat on/off ramp solution now at crossriver.com/crypto.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

OpenSea has disabled trading for a Bored Ape Yacht Club (BAYC) non-fungible token on its platform amid an ongoing court case in Singapore.

The item in question, BAYC #2162, is now marked with a “reported for suspicious activity” tag on OpenSea, the world’s largest NFT marketplace. This tag prevents the current owner from being able to list the NFT for sale. Prospective buyers also cannot place offers for the item.

An individual called Rajesh Rajkumar was able to secure an injunction from the Singapore High Court blocking the sale after a loan agreement with pseudonymous NFT collector chefpierre.eth soured, according to a court filing and a statement from Singaporean law firm Withers KhattarWong.

According to the law firm, both parties entered into an NFT loan agreement on March 19 with a subsequent refinancing deal a month later. This transaction was carried out on NFTfi, an NFT lending platform.

Rajkumar used BAYC #2162 as collateral for the loan with both parties agreeing on an extension clause for the refinanced loan, according to the law firm’s statement. The plaintiff was unable to pay back the loan at the due date but still had the option to extend this date as previously agreed upon.

According to Withers, chefpierre did not abide by the extension agreement but foreclosed on the loan. This action released the NFT from the platform’s escrow to chefpierre’s wallet.

The BAYC floor price, the market value of the cheapest item in the collection, is currently at 96 ETH ($190,000). 

“While we don’t offer details about enforcement actions on individual collections, I can share that our platform policies and Terms of Service explicitly prohibit the use of OpenSea to buy, sell or transfer stolen items, fraudulently obtained items, items taken without authorization and/or any other illegally obtained items or launder money,” a spokesperson for OpenSea told The Block.

Chefpierre hasn’t responded to The Block’s request for comments as of the time of publishing.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Although Panama’s National Assembly passed a crypto asset regulation bill in late April, its president Laurentino Cortizo said he would not endorse it as written today.

“If I’m going to answer you right now, at this moment, the information that I have — which is not enough — I will not sign that law at this moment,” Cortizo said on stage at the Bloomberg New Economy Gateway Latin America conference on May 18. 

The bill would need to sufficiently take actions against money laundering for it to get the presidential seal of approval. Cortizo explained that his legal team would have to analyze the bill and recommend whether to pass it fully or partially as written.

“I have to be very careful if the law has clauses related to money-laundering activities, or anti-money laundering activities,” he told the audience. “That’s very important for us.”

Lawmakers overwhelmingly voted to advance the bill, which “regulates the commercialization and use of crypto assets,” according to a news summary on the National Assembly website. 

Cortizo also stated his view that the world needs global crypto regulation.

“It is an innovative law from what I have heard — it’s a good law,” he said. “However, we do have here in Panama a solid financial system, and one of the things that I’m waiting [for] is when you have a global regulation of crypto asset[s], and it is important that we need a global regulation of crypto asset[s].”

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Former Commodity Futures Trading Commission (CFTC) head and crypto advocate Christopher Giancarlo has taken a seat as the chairman of crypto prediction platform Polymarket’s advisory board.

The platform utilizes smart contracts to enable betting on event outcomes through the USDC stablecoin. Polymarket has said these are “decentralized information markets,” which are used to reflect public sentiment through funds. Still, the platform enables users to purchase a contract based on a certain outcome at a price set by other people’s sentiment and potentially receive a higher payout if the market resolves in their favor. 

The CFTC determined those transactions constitute swaps, which requires licensure the platform had failed to obtain. Polymarket settled with the CFTC at the start of this year for “offering off-exchange event-based binary options contracts and failure to obtain designation as a designated contract market (DCM) or registration as a swap execution facility (SEF).” It paid a $1.4 million fine. 

At that time, the CFTC noted Polymarket’s “substantial” cooperation in the case, which reduced the penalty. Post settlement, it began geo-blocking US users to comply with its settlement measures. Still, at the time the new geoblocking measures were first put in place, a reporter from The Block was able to circumvent the geoblock using a VPN, though the reporter did not submit a transaction. 

Polymarket CEO Shayne Coplan indicated that Giancarlo may help the firm navigate US derivatives regulation. In a Twitter thread announcing the appointment, Coplan said Giancarlo’s skillset is “exactly what’s needed to pioneer compliant DeFi in the US.”

“The key will be abstracting the best parts of DeFi and adapting them to fit within the existing regulatory matrix,” Coplan tweeted. “This will require novel solutions and collaboration, and Chris is the perfect person to help us get there.”

Giancarlo noted the amends Polymarket has sought to make post-settlement in Bloomberg’s coverage of his advisory board appointment, saying they followed the legal process, moved everything offshore, and did what was required. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

After publicly announcing plans to slow hiring, tough market conditions have pushed crypto exchange Coinbase to look for ways to slash spending, according to emails obtained by The Information.

Coinbase has felt the fallout of recent market conditions, incurring a net loss of $430 million in its first-quarter earnings and a plummet in its stock, $COIN. That led the firm to announce that it was reevaluating its previous plan to triple the size of the company and instead slow hiring at the moment.

According to internal emails, the extent of that reevaluation appears to be considerably more than just slowing hiring. The Information reported that the emails contain plans to freeze hiring for two weeks and cut spending on cloud services and gas fees among other cost-cutting measures. 

The plan is code-named Plutus, according to The Information, and is detailed in an email from Coinbase Chief Product Officer Surojit Chatterjee. Plutus is the Greek god of wealth, and Chatterjee laid out a plan to capture such wealth by focusing on driving more revenue in “highest-impact” products.

That includes focusing on retail trading, staking and institutional trading and custody by adding tokens and expanding custody and international expansion for retail traders and its prime brokerage service. The firm also plans to focus on its Coinbase One subscription service, which charges a recurring fee rather than individual trade fees. 

In addition to increasing the revenue flowing in, Plutus plans to reduce the money flowing out by cutting costs on cloud services and gas fees. The Information reported that the details of these plans were not detailed in the emails it obtained, but Engineering Vice Presidents Sumanth Sukumar and Will Robinson will lead the efforts on minimizing software costs and gas fees. 

The emails obtained by The Information also included a message from People Officer L.J. Brock. Hiring will be on hold for at least two weeks, though already-extended offers and scheduled interviews will be honored. And though it’s not looking to expand the headcount at the moment, it’s looking to maintain it.

Brock’s message included a commitment to grant extra stock to employees scheduled to vest in Q2 to make up for the recent decline in $COIN.

When reached for comment, a spokesperson directed The Block to tweets posted Thursday by Surojit Chatterjee, the firm’s chief product officer. In the thread, Chatterjee wrote that “we will be doubling down on high impact products” including “our core retail and institutional trading products, as well as staking.”

“This does not mean we plan to stop investing in strategic and venture projects. We believe the down market is a great time to build for the longer term,” Chatterjee wrote in the thread. “We’re working on foundational web3 efforts and many of which I announced in the recent Permissionless conference.”

At the time of publication, $COIN is trading at $67.42, gaining slight ground from the post Q1 earnings drop to $61.70. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The Face Forward Project, a COVID-19 prevention effort focused on vaccination, is minting the portrait of vaccinated teens into non-fungible tokens (NFT). 

According to a Chicago government release, the effort is meant to reward young people who have vaccinated themselves against COVID-19. Teens can have their portrait minted onto a one-of-one NFT to keep or to later resell on a secondary marketplace. 

The NFT multimedia platform VAST will give NFTs to the teens who choose to participate, and each NFT includes an excerpt from work from the Chicago-based musician Keith Harris.

While NFTs have been used to augment charity donations, this appears to be one of the first times digital collectibles have been used to reward public health initiatives, especially that against the coronavirus pandemic. 

NFTs have slowly crept into health and lifestyle spaces, however, particularly with the success of move-to-earn platform STEPN, a blockchain-based gamified step platform that encourages users to walk or run.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.