The Un-stablecoin

What the @*$! is a Stablecoin?

A stablecoin is a cryptocurrency that is pegged or collateralized to another asset. These assets can include the dollar, cryptocurrencies and other stablecoins.

The main idea of a stablecoin is to have a token remain at a constant value of $1. Certain situations arise when the price does not stay constant, and we will get into that shortly.

A quick overview of the top stablecoins according to CoinMarketCap:

• Tether: Pegged to the US Dollar; Current Market Cap: $72 Billion

• USDC: Pegged to the US Dollar; Current Market Cap: $53 Billion

• BUSD: Pegged to the US Dollar; Current Market Cap: $17 Billion

There are 4 specific types of stablecoins that can be traded on the market today: fiat-backed, crypto-backed, commodity-backed, or algorithmic.

How $UST paved the way to regulation.

$UST (TerraUSD) is an algorithmic stablecoin on the Terra blockchain. It is value-pegged to the US dollar and was known for its scaleability and its staking platform.

However, this reign did not last long for $UST. The general idea of the stablecoin was that $1 of $LUNA was worth $1 of UST, and this is how their platform ran. When $UST lost its peg, no one thought it would turn out the way it did.

At $.95, many thought they would have used their Bitcoin reserves to stabilize and regain their peg. But they never did. Today, $UST is trading around $.02. After their collapse, regulation was called upon. The Head of the International Monetary Fund (IMF) called for immediate regulation, saying these stablecoins are "pyramids" and that "they all eventually fall". (CNBC)

LUNA 2.0 follows in its father's footsteps

Terra Luna developers soon realized that the current state of LUNA was past the point of no return. This prompted the team to launch a brand new blockchain on May 28th in hopes to revive the once thriving Terra Luna ecosystem. New $LUNA tokens were airdropped to users that were affected by the collapse of the original chain. Shortly after launch, $LUNA reached prices near $30 on some exchanges. This, however, was soon followed by a rapid decline over 60% back into the single digits.

The team's decisions to create an entirely new blockchain brings up another issue. All applications built on top of the original chain will have to be redeployed. Platforms such as Anchor Protocol and Mirror Protocol must start from scratch to bring users back onto their platform.

Other blockchains like Avalanche and BNB Chain have offered to help bring over developers looking to leave the LUNA ecosystem entirely. The unprecedented collapse of $UST has devastated many investors in the Terra Luna community and has reminded everyone of the risks associated with cryptocurrencies.

"Snap" back to reality

Transitioning our way into the stock market, one that separates itself this week is Snapchat (SNAP). In the chart above, Snap was trading around the $24 mark. After their earnings report this week, Snap dropped more than 30% in value.

The numbers speak for themselves when you dive a little deeper into Snapchat's earnings. They posted an earnings-per-share (EPS) of ($.02), when estimates were sitting at a $.01 gain. Also, their revenue increased 38% year over year. However, they reported a net loss and have lower free cash flow during this quarter.

It does not stop there. Regardless of the numbers, a big factor is outlook for future quarters. On the day Snap was releasing earnings, CEO Evan Spiegel told employees that Snap was going to miss their earnings estimates. After earnings were reported, Snap said they would be slowing down hiring later in the year in order to manage their expenses in the future. (CNBC)

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