UST Demand Surges, Markets Turn Sour, & Ember Sword Alpha

Chart of The Day: LFG and Mars Protocol Spur UST Demand

• For those unfamiliar, UST is a decentralized algorithmic USD stablecoin built on the Terra ecosystem. Each UST is minted through the burning of LUNA and can also be redeemed for the dollar equivalent of LUNA by burning UST.
• Over the past 2 weeks, UST supply has grown by 818M, or 7.2%. This has led up to a net burn of ~11.8M LUNA over the course of 2 weeks.
• Luna Foundation Guard (LFG) recently announced a $450M LUNA burn to capitalize Anchor Protocol’s Yield Reserve, which was the key driver of LUNA burns and UST Mints. LFG has finished converting the allocated LUNA to UST, which can be tracked on their Terra address.
• The launch of Mars Protocol’s Lockdrop could be yet another catalyst for UST demand. Lockdrop allows users to lock UST into Mars’ Red Bank in exchange for a distribution of $MARS tokens that are claimable once the protocol launches.
• Mars Protocol’s Lockdrop goes live today, and you will have until February 25th (This Friday) to participate.
• For more information about the Lockdrop, visit the link here.

Crypto Market Can’t Catch a Break

[Excerpt from our weekly Market Insights]

• February has proved to be an extremely volatile month for Bitcoin and the wider range of crypto assets, with prices making large moves to both the upside and downside. The first two weeks of the month saw prices rally off of the January lows at $33K to about $45K. Although moves like this happen more frequently in crypto and crypto natives tend to get jaded by larger percentage moves, this was still a big move for any asset (BTC included), topping out at around 40% from the lows.
• In last week’s Markets Insights, we mentioned a few things that are prudent to revisit given what’s occurred since. First, we stated, “bitcoin is heading into resistance on multiple timeframes…what we mean by this is BTC is moving into an area of daily, weekly and monthly resistance.” This is notable because when multiple timeframe levels overlap, you can expect to have a larger amount of market participants willing to get involved in the action. We also explained, “this area, $45K, is a logical place to expect profit-taking/risk reduction activity due to the confluence of resistance zones and the speed and magnitude of the move off recent lows”, and cautioned against adding excessive risk heading into these zones.
• Revisiting the weekly chart, it immediately becomes clear that BTC is still struggling to shake off this multi-month sell pressure. After the initial rally and move off of the lows, price has stalled for the last two weeks, while failing to reclaim any weekly support structure, or the midpoint of the yearly range. In addition, the weekly chart is also leaving wicks to the upside, indicating sellers are still in control.
  

• Zooming in a bit more, we can see that our cautionary stance last week has proved to be the prudent action as price has pulled back 10% from the identified $45K resistance level to $40.5K at the time of writing.

• The following are key levels that we highlighted to the downside (in the case of a pullback due to all of the factors discussed).

  • Support at $40-41K: A successful shift from a downtrend into a more bullish market structure would be supported by the first level of support holding firm. Ideally, this means that the $40K-$41K support level should hold. We also have confluence with the white VWAP line, which is anchored to the 2022 Yearly Open, adding further support to this thesis. As you can see, these levels have been important to watch, especially as price pulls back from resistance.

  • Support at $38.5K: If the $40K level fails to hold, the next level of market structure is in the area of $38.5K. Should we lose this level, you can expect prior lows to be revisited, with a decent likelihood of price probing lower.

• Since the publication of this Market Insights, BTC has seen a move downwards to the $38.5k support range. We will have to see if it can hold this level or expect a further downward trend heading into March.

Gaming Insights – Immutable X Ecosystem

[Excerpt from our weekly Gaming Insights]

• The creators of Ember Sword, Bright Star Studios, aim to open up alpha testing for NFT owners in the first quarter of 2022. They will also announce the second land sale, which will occur around the same time. Bright Star plans to continue releasing more gameplay-focused alpha versions throughout 2022.
• We’ve previously touched upon Ember Sword in our 2022 Crypto Year ahead report. Ember Sword is a free-to-play sandbox blockchain MMORPG, which announced its move from Polygon to Immutable X two months ago. The reason for this migration boiled down to features such as accessibility, custodial wallet solutions, and payment via credit cards.
• Ember Sword will be released on PC first (browser), then as a stand-alone client, and gradually build towards cross-mobile play.
• 2021 was a breakout year for NFTs and gaming, with blockchain games having generated $2.32B of revenue in the third quarter of 2021 alone. Axie Infinity was the first of the lot to surpass $1B in NFT sales. As a result, there has been a flood of capital, founders, developers, and even entire gaming studios now entering into the blockchain gaming space. This has fueled many new projects being built that we’ll see come to life in 2022 and beyond. This year, not only will we see new games onboarding thousands of players into the crypto ecosystem, but we’ll also see DAOs, Guilds, and identity layers emerge that synergize with these games to make all of web3 more vibrant and valuable.
• Delphi members can read the full post here. Future editions of Gaming Insights will highlight all the playable modules, major drops, and releases happening in 2022.

Notable Tweets

Technical Explainer on Yesterday’s OpenSea Phishing Attack

1) Sharing a technical run-down of the phishing attacks targeting @OpenSea users, including some web3 technical education.
👇

— Nadav Hollander (@NadavAHollander) February 21, 2022

The Power of Super Bowl Ads

Super Bowl ads boosted crypto app downloads by 279%, led by Coinbase

https://t.co/HsWL4sxmva

https://pbs.twimg.com/media/FL5SbhWWYAUpFo9?format=jpg&name=small

— unfolded. (@cryptounfolded) February 19, 2022

Tips on Surviving a Bear Market

Read: Surviving the Bear Market

• Sample Portfolio
• Stablecoin Strategies

— The DeFi Edge 🗡 (@thedefiedge February 17, 2022