Rusty Foster, of the truly excellent Today in Tabs newsletter:
TerraUSD is an “algorithmic stablecoin,” where the much-abused word “algorithmic” here means “bullshit.” It is the third largest stablecoin in existence, with almost 18 billion tokens in circulation. The way it works is this: a developer named Do Kwan made two new crypto tokens. One is called Terra, and Kwan said “those are each worth one dollar.” The other is called Luna, and the value of Luna is allowed to float, so it’s worth whatever someone wants to pay for it. The two tokens can be converted into each other, so if Luna is worth $30, you can destroy one Luna and get 30 Terra (which are supposed to be worth $1 each). And if Terra was worth less than a dollar, you could destroy 30 Terra to create 1 Luna at a discount, which also will decrease the supply of Terra and make it more valuable, via good old supply and demand, eventually pulling it back up to $1.
Have you spotted the problem yet? If you have: lol, right? If not: I promise you have, you just think it can’t possibly be that stupid. […]
Caitlin Ostroff and Alexander Osipovich, Wall Street Journal:
TerraUSD in Monday evening trading was at about 80 cents, after touching the low of 69 cents earlier, according to CoinMarketCap. Panic selling also hit the related Luna cryptocurrency, which plunged 50% from Sunday to Monday, wiping out more than $10 billion of market value, CoinMarketCap data show.
Andy Baio adds:
This was entertaining to watch yesterday until I saw a suicide hotline topping their subreddit.
That is what is going on at a smaller player in the cryptocurrency world. How about one of the biggest and most popular exchanges? What is the situation like at, say, Coinbase?
Ben Levisohn and Janet H. Cho, Barron’s:
Coinbase stock is down 83% from an all-time high of $368.90 last November, when Bitcoin’s price also peaked at $67,802.30 per coin.
Coinbase reported a loss of $1.98 a share, missing estimates for a 1-cent loss based on generally accepted accounting principles, or GAAP, on sales of $1.165 billion, below forecasts for $1.5 billion. That was down 27% from one year ago.
If you tweet the word “Coinbase” right now, you may get some automatic replies masquerading as Coinbase support, with a link to a Google form where you can enter your Coinbase login information.