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Following the collapse of TerraUSD (UST), which we will cover in-depth this week’s Long Take, Tether’s USDT depegged, falling down to $0.95 briefly. Unlike UST, Tether is not “algorithmic” and is meant to be backed by assets. But last week’s edition highlighted Tether’s lack of transparency, and the general uncertainty about its commercial paper counterparties.
Fantom’s algorithmic stablecoin DEI also collapsed to $0.54 days later. The crypto community is now showing distrust in algorithmic stablecoins — it’s a slow moving market math formula that solves to $X = 0. The result is issuers like Circle grow their market share with fully collateralized fiat. It will also likely force improved transparency and regulation in the stablecoin market.
Flow is best known for powering the NFT trading platform, NBA Top Shot. Its new $725 million fundraise will be used for developer incentives in the gaming and content creation space. There’s been severe contraction in the sports NFT market, and in particular in the trading volumes for NBA Top Shot. Incentivizing activity through grants is the L1 playbook of the day (see our Long Take), and now Flow has to compete with Apes for attention. That said, they’ve done it before by finding a hit after Crypto Kitties, and we are optimistic about their ability to do it again.
