In the beginning of 2022, I have been targeting on Solana chain and its ecosysteam for its characteristics of cheap transaction fee and high TPS, despite they are condemned for its lack of decentralization. It is really gladful more and more developers and participants come into blockchain ecosystean to give a try on decentralized world as we could see volume on NFT market is increasing and events of game-Fi keep being released.
However, those interests fail to compenstate for the notch of belif on crypto as current market is in the horrified sentiment along with the aggressive contractionary montary policy and uncertain geopolitical circumstances, not to mention Luna deprecaties and sinks to under 0, which greatly hurts the reputation and promise of whole crypto ecosysteam.
Being optimiatic with enthusiasm for blockchain technology, I’m still looking forward to the future of crypto, but with some modest compromises. Regulated crypto seems like one of ways to persuade current market particaipants and relieve from chaos in the market. Hope not to misatkenly assume this will break the core principles of crypto and blockchain, namely transaparent and decentralized society. Instead, to protect inncoent participants from being defrauded, licensing companys for operating some legitimate tasks and promise a safe business Defi protocal are undoubtedly good for both sides and rebuild the reputation of cyrpto.
Luna short takeaway
Though it seems like a hindsight, I initially doubt on the possibility of Luna and its ecosysteam for its unreasonable high yields return in above 10% APY. That is rediculous for getting that high rewards without being exposed to risk as they give you the unproved promise of UST standing for stablecoin, but pegging to USD by arbitrage mechanism of adjusting quantity of Luna and UST is risky, since Luna undoubtedly is volatile assets, not to mention we are in the most risky crypto markets. When a large amount of UST has been converted to USD, we could only expect someone holding their USD buy UST in discounted price and convert to Luna by the means of buring UST and minting Luna to put UST price back. However, who else would like to hold Luna when market is in disaster…, then it is where death spiral comes in
death spiral
Selling presure on UST → Selling presure on Luna →Keep selling UST… , until both assets turns to dust and ashes.
Stable coins usage and Volume restriction
Currently, it seems like the safety of USDC/ Tether / DAI have been tested and works fine at the time of writing. These is no reason stablecoins exist in diverse forms as they provide same value as a unit of USD, further, as volume of stable coin is in large increment, we are more likely to burden with acceptable attacks instead of falling forever as Luna did, which also improves the communication of cross-chain operatability
I think most of Defi protocal are exposed to one critical problem — low utilization on pools and their own ecosysteam. They should start to take some concetps of POL or concentrated liquidity into consideration, which have funds be more efficient instead of appealing a large amounts of fund with high APR in exchange for inflationary protocal-tokens. For example: curve, uniswapv3 on Ethereum or Lifinity, Orca on Solana are successful pioneer.
In conclusion, crypto market still has its potential as more and more countries start to regulate and adopt the crypto implementatin, one of the most potential coutries will be south Africa as they have keen neccessities for storing and transfferring value of Gold mining. While it will not be surprising crypto will come across harsh regulations accompanied with Luna incident, crypto will still be moving on but in slower way. As the result, I will put my attention on NFT art works and its further development, DAO structure with physical and feasible ecosysteam in remaining time of 2022.
