RALLE RALLE RALLE Azuki & Zagabond Take me to Goblintown The NFT space was jolted by the revelation. Read our detailed analysis inside. Sometimes stealth mints don't end up in your hidden folder. What're we minting?! The LUNA Eclipse Millions of $s burnt in one of the most anticipated drops of 2022. Is stablecoin an oxymoron? SAME ALPHA FRESH NEW LOOK A few words from JakeandBake MVHQ'S FEARLESS LEADER Over a year ago Metaverse HQ began its journey as a community together into the Web3 world. Along the way, it became very apparent that MVHQ was not simply just another alpha group, but a much larger community driven family. With 2 the help and contributions of many members along the way, we have seen the community grow in ways we never could have expected or anticipated...and for that I am forever grateful. As the Web3 space continues to evolve at a rapid pace, Metaverse HQ has remained a steady presence and industry leader as one of the earliest and most recognizable NFT communities. One constant throughout this process has been the strength of our community and their willingness to give back and provide for all members - new, old, experienced, entry level and everything in between. It is this foundation of selflessness that MVHQ prides itself and will continue to lean on as we move forward. I am proud to present the first edition of the MVHQ Magazine, as worked on by a variety of staff and community contributors. This publication is an extension of our core values; empowering members who graciously volunteer their time and creative efforts to help bring actionable and insightful analysis to MVHQ. For this next step of our journey we welcome the broader NFT audience to join us as we reflect, learn and grow together as one Web3 community. Eyes Forward, Jakeandbake Degen-z @Hassan_Zeee HeartofTexas @HeartofTexas Laserweims @Weimsie MacUhtack @MacUhtack @Poopaloop_NFT Silvaserger @Silvaserger TopHatCat @TopHatCoolCat Poopaloop Tyler.Scharf @TyScharf 3 This Months Contributors What're we Minting?! Broke on through Touching Grass A bear market Perspective Interview with an OG Conversation with an MVHQ veteran It's DANGEROUS to go Alone. Take this! Chapter 1: Building habits The LUNA Eclipse One stablecoin’s failed attempt at base money Livin' in a Scammer's Paradise The most common scams in Web3 Take me to Goblintown Hope in difficult times Azuki & Zagabond: A cautionary tale or growing pains? Spring Merch '22 Fresh threads | 4 | 8 | 10 | 12 | 13 | 14 | 16 | 18 Is the Grass Greener? Interview with a new MVHQ member | 20 | 21 Market at a Glance What happened this month | 22 Azuki & Zagabond: By Silvaserger A cautionary tale or growing pains? In just the past few weeks we have seen just how fine the line between serial rugger and innovator can be. The NFT space was temporarily thrown into upheaval after the founder of Azuki, Zagabond, admitted to being the founder of three previous projects. Normally that would not necessarily be cause of alarm in and of itself but the details behind his exit and the events that followed have left some with a sour taste in their mouths. This has left some feeling betrayed, having left the Azuki community altogether, while others have doubled down and committed even further to the Azuki brand. Before examining the nuances I think it’s important to define what exactly is a “rug”. For the purposes of this exercise let’s try to keep this to two specific ideas: a “hard rug” and a “soft rug”. A hard rug is considered when a project abjectly ceases development and usually follows with developers removing all funds from the smart contract and leaving the project discord, telegram, etc. This usually happens quickly and unexpectedly for community members and the damage is done in a matter of minutes. Think “Real eyes realize real lies. See you on Monday!” - Thanks for the lasting words of wisdom, Boneheadz. A soft rug on the other hand can take more shapes and forms and might be a bit more difficult to spot. A soft rug can occur when a project does not have expected levels of success or is unable to meet community expectations and keep the promises they made. This is a much more common occurrence where projects sadly fizzle out into the ether because they were not “The Next BAYC”. The community slowly dissolves while project leads “slip out the back door unde- tected” so to speak as atten- tion has already turned to the next big thing. So if both rugs have similar outcomes should the path that leads them there matter? While both can be considered a rug and detrimental to the space, I do believe a hard rug is much more damaging than a soft rug simply due to the intention behind it. The sort of bad actors known to rug usually have the act premeditated and had planned so from the start. Having nothing but bad intentions and moving on from a seemingly unsuccessful project constitute very different ideals when considering the creators behind them. Zagabond’s past experiences revolved around three projects, mostly derivatives but I want to focus on CryptoPhunks, the flipped CryptoPunk derivatives. At the outset of the project there was very little if anything promised to holders other than the flipped image of a punk. A profile picture. There’s your utility. Take it or leave it. Having not had the privilege of taking part in the DMs between Zagabond and others I will never know all of the details, but I believe Zagabond delivered on the initial promise of the Phunks. In this reg- 5 has settled and barring a slew of new accusations I do not anticipate the collection’s value to change based on Zagabond’s perception, the public has spoken. I will, however, freely admit my fears around the public’s willing acceptance of Zagabond’s actions. I worry for the space as a whole when bad actors become emboldened. Now it seems a precedent has been set. It’s okay to willfully mislead and deceive others. I fear the next Zagabond. What happens when the next wildly successful project has a founder that doesn’t decide to stick around? Imagine a project with the success of Azuki, a floor price of 20+ ETH, and suddenly poof. The contract wallet is drained and instead of sticking around to address FUD and ease the community, they walk off into the sunset with thousands of heart broken, “down bad” holders. Do you think the community would rally behind a new ethos and team in order to revive a brand they “love” so dearly? Or with their once beloved project now the butt of the joke they look elsewhere, accepting their losses and potentially exiting the NFT space all together? My point is; the willingness to forgive and forget acts that any other comparable industry would find tantamount to a fireable offense sets awful precedent for those who can cause the most harm to us all. No one on the outside looking in wants to join a space rife with rugs and founders who have no standards of accountability. Constantly having to look over our sho- ard I do not consider Zagabond’s actions a rug. However, thanks to the power of hindsight we know that time doesn't stop just because it's convenient for some of us! Unfortunately Zagabond's actions continued after leaving the project to the community, including some shenanigans around changing royalty percentage for some users farming rewards on LooksRare to name one of the more standout charges against him. As his exploits were uncovered the picture seemed to shift from one portraying Zagabond as a builder who delivered on simple promises and left to grow his experience, to one who may have had more sinister intentions. His actions were not mistakes. No one accidentally increases their royalty by 10% and then reverts it back to 0%. Those actions take forethought and do not occur without meaningful intent. Now knowing all of this, who is qualified to judge Zagabond on his actions? And the answer is, no one is really qualified given the limits of what we know, but that won’t stop the court of public opinion though! What matters is not my expectation of the creator, but on the general public’s expectation and acceptance, and the ripples those impacts will have on the future. The actions that Zagabond took can not be undone or changed. They are history for all intents and purposes at this point. Now we wait to see the consequences of his actions. Interestingly enough I do not believe that Zagabond is who will feel the consequences of his own actions the most, it is us the broader NFT community. For better or worse the NFT community has spoken with their wallets and shown the level they are willing to support Azuki and by proxy Zagabond. The floor price has taken a significant hit but still resides in a respectable range commensurate with what we see for the better projects in the space. The fallout 6 ulders in fear of our favorite project being founded by Beanie in Groucho Marx glasses does not lead to a healthy social dynamic in the NFT space. On second thought, that image doesn’t sound good for any dynamic, anywhere, ever. NFTs as a whole exist with some of the most interesting social and economic dynamics seen in any industry. Social media around NFTs often comes off as intense zealotry as people promote their own holdings, because as we all know, art only looks better as floor price increases and that’s a fact! Glaring red flags can often be tossed by the wayside because who really enjoys shoo- ting themselves in the foot? Once you’re part of a “community” you instantly become heavily incentivized to only repeat the talking points already in the echo chamber and ignore anything dama- ging, that is of cou- rse until you sell and are now incentivized to do the exact opposite in hopes of reentry. This creates an endless feed- back loop where the business decisions drive your social interactions and vice versa. We’ve seen how this can both positively and negatively affect projects in drastic ways like we saw when Azuki slingshot from 22 ETH down to 7 ETH and back up to 17 ETH. We saw a macro trend that normally takes months to play out within a single project in just a few days. Needless to say, the social constructs developed around the NFT industry are far from healthy or sustainable, especially when so much is fueled by the 7 revelations of one person’s past. Cults of personality will never end. Well, unless we enter some quasi-Huxely dystopia, but that’s next month’s piece. I think the NFT space finds itself in a pec- uliar place, wrestling with separation of fou- nder and project, and whether it’s even something worth separating. Plenty of traditional companies and markets can be moved by key individu- als, both for better or worse, but if the Web3 world is as idyllic and decentralized as NFT Twitter would make you believe then it needs to decide if this sort of behavior will be tolera- ted or not. Again, I am not the one to decide that. That decision can only come from the broader community as it sees fit, and I hope they make that decision sooner rather than later because I have a feeling the next time we encounter a Zagabondesque figure, they might not be so gracious. What happens when the next wildly successful project has a founder that doesn’t decide to stick around? " " What're we Minting?! By MacUhtack 8 "Broke On Through" What do you get when you combine the most hyped project in the NFT space and mountains of liquid capital? Well, if you are Yuga Labs, the answer is money... lots of money. Yuga Labs sold 55,000 NFTs for their newest project, Otherside, on April 30th and hauled in approximately 16.7m Apecoin (worth roughly $ 350m at the time of minting). Yuga Labs wasn’t the only beneficiary of the massive demand for these NFTs, Opensea saw roughly 113,000 Eth in volume on day one, and the Ethereum blockchain became deflationary during the frenzied mint. That is a significant amount of cash changing hands, so let’s break on through to the Otherside and take a look at how we got here. In the midst of global uncertainty, a group of disinterested apes from the swamp are setting out to build the wildest place in the metaverse. On March 18th, a teaser video of Yuga Labs newest project, Otherside, was revealed. The teaser video, set to Break on Through by The Doors, was met with applause and rampant speculation about the project’s details. Five weeks later, on April 23rd, Yuga Labs announced a mint date and opened up the Otherside discord. The mint would start at 9pm ET on April 30th, and the unsuspecting Ethereum blockchain would see its heaviest load of traffic this year. The price of each Otherside NFT, AKA Otherdeed, was set to a flat 305 Apecoin. At the exact time of minting, that was appro- ximately $6,000. A total of 55,000 of the full 100,000 Otherdeeds were avail- able to participants who KYC’d their Ethereum wall- ets earlier in the year. Each KYC’d wallet was restricted to 2 Otherdeeds at the beginning of the sale. The remaining 45,000 Otherdeeds were split between Bored Apes (10,000), Mutant Apes (20,000), and Yuga Labs (15,000). An additional 100,000 Otherdeeds will be made available at some point in the future. These Otherdeeds will be “exclusively rewarded to Voyagers who hold Otherdeeds and contribute to the development of Otherside” per the Otherside website. 55,000 Eth burned in gas fees and 14,000 failed transactions. " " Because only KYC’d wallets could mint, an underground market for buying and selling KYC’d wallets sprang up. Wallets were going for upwards of 1 Eth. Those audacious degens who survived the minefield of scammers were rewarded with extra mints. It’s important to recognize that while this may have been a winning strategy for some, it’s extremely risky because the seller would still have access to the wallet’s seed phrase (assuming they sent you a real wallet in the first place). This strategy was a little too risky for my taste. the drop was very mixed, the market sentiment was riding high. On May 1st, the unrevealed floor for an Otherdeed was bouncing around 7 ETH and sales volume was over 100,000 Eth. Otherdeeds revealed on May 1st. Most of the details about game mechanics are still unannounced, but certain traits, resources, and locations are commanding a higher price. Notably, there are 10,000 Otherdeeds with Kodas. The current floor price for an Otherdeed with a Koda is 24 Eth compared to the floor price for a less desirable Otherdeed at 3 Eth. So Far, the highest sale for an Otherdeed was 625 Eth. While the floor price has come down some since reveal, there is still a lot of demand for Otherdeeds with total volume sitting around 284,000 Eth less than a month into the project’s existence. A tech demo for the Otherside was released on May 11th. The demo features footage of an ape running around in a 3D world reminiscent of a modern day MMORG. The Otherside is being built in partnership with Animoca Brands and Improbable. Animoca Brands is a large company partnering with numerous blockchain projects such as Axie Infinity, Dapper Labs, and Sandbox just to name a few. Improbable is a game development studio that focuses on creating complex virtual simulations. In 2016, they won a multi-year contract with the US Army to develop war-gaming simulations, and have recently pivoted to applying their technology towards creating metaverses. It will be interesting to follow the Otherside project over the coming year amongst the current bear market sentiments. Yuga Labs has plenty of funding to make the Otherside a reality. With a lot still unknown about the details of development or mechanics of the game, the risk of assets holding value is certainly there. Regardless, a lot of people are betting big on the Otherside becoming the dominant metaverse. On April 30th, when the clock struck 9pm ET, a violent wave of degens, bots, and normies descended upon the Otherside contract. In the first hour of minting, gas fees rose to nearly 10,000 gwei. Innocent collectors were paying well over 1 Eth in gas fees in the hopes of getting an Otherdeed. Some outspoken personalities would blame Yuga Labs for deploying an inefficient contract, but that doesn’t matter so much with this level of demand. The Ethereum blockchain was working exactly as intended. When demand for block space goes up, the cost to use blocks goes up. The only way to mitigate these costs, given the demand, would have been to launch on a layer 2 scaling solution or implement a claim mechanism for each wallet. Over the course of the Otherside mint, there was approximately 55,000 Eth burned in gas fees and 14,000 failed transactions. Due to the amount of Eth burned, Ether became a deflationary asset for the day with daily net issuance of Eth hitting -55k. An onslaught of irate tweets about failed transactions caused Yuga Labs to issue some refunds here and there. While the social sentiment of 9 It seemed as innocuous a Tuesday as any other. I woke up, made a cof- fee, and washed so- me dishes but bef- ore I knew it I was outside. Stranger than just appe- aring outside, I apparently de- cided to take a walk. This walk was quite the departure from my usual morning routine. The entire time I felt this nagging that I should be do- ing something else with my time,somethi- ng more...profitable. My mind raced with the poss- ibilities, I could check the firehose on NFT Nerds, or potentially scan what its Solana counterpart has to show me. I could peak into my coin portfolio to see how down bad I am in that regard or look for a bit more pain within the walls of WGMI. There were a litany of repetitive, anxiety- inducing chores I could have concerned myself with, however, I chose none. I, instead, finished my walk, kicked off my shoes and stood on the lawn, and by lawn I absolutely mean the one patch of grass surrounded by concrete on the sidewalk. It was at that moment I had accepted this strange new phase of the crypto and NFT market. The phase where I could enjoy the sounds of birds chirping, the warm breeze against your skin and the unmistakable feeling of grass beneath your feet...this was life in a bear market. Markets across the globe have taken a significant hit in the past several weeks leading to what most in the industry would call a “Bear Market”. Whet- her we can consider this a full-blown bear or not is still up for de- bate, but what is not debat- able is the notable down- turn in seco- ndary market volume for NFTs and broader senti- ment around risk assets in general. With both traditional and risk associated markets feeling the heat from various global events you might ask yourself, “We’re in a bear market....now what?”. You can continue to stare as your portfolio value plummets or you can do something you’ve most likely neglected since entering the space, pay some mind to your mental health. Slow periods in the market are perfect for getting outside, stretching your legs, and yes even “touching grass” as the degens might say. Use this time to prioritize yourself and your mental and physical health. Take a walk. Go for a swim. Meet some friends for a game of soccer in the park. If exercising isn’t exactly the ideal activity for you, then take a book to a nice outdoor area and enjoy the sunshine without all the hassle of getting sweaty! Touching Grass By Silvaserger 10 Point being, taking care of yourself and allotting the time to truly enjoy something without worrying about the market can do wonders for your psyche. Ultimately you want to be ready for the ensuing bull market and be able to capitalize on whatever comes your way. Outside of purely pleasurable activities to distract ourselves from the market and as cliché as it may sound, quiet times are perfect for learning a skill or investing in yourself. This can take shapes in many different ways! There’s far from only one “correct” way to improve. Whether that means improving physically by starting to exercise, then that is a wonderful way to begin! But that is no better than someone who wishes to take the dive and learn how to code, or someone picking up a new language after struggl- ing on an earlier attempt. Regardless of the “what” that will concern you, ensure it is a topic you have genuine interest in that will be fun to learn while also fulfilling during this down time. Now that you’ve taken some time to steady yourself mentally and physically we can address the elephant in the room - well really more of the bear in the room, but you catch my drift. So far we’ve essentially been avoiding the markets and turning attention to other avenues in hopes of not making hasty decisions in a bear market, but avoidance tactics only work for so long! Now it’s time to grab the bear by the horns, I’ll let you decide exactly where 11 that may be anatomically, and look not at how to slow the bleeding, but how to be proactive about making better choices in these slower periods. Just because the market is slower doesn’t mean there is not still money to be made. It may take more time and effort than it typically would but the opportunities still exist. If you feel comfortable primarily in NFT trading, the projects most would describe as “blue chips” have still seen relatively strong volume while some have even managed to increase their floor price! Looking at the strongest projects would involve BAYC/ MAYC, Doodles, RTFKT CloneX, Moonbirds and a few other not- able headliners who could all be considered “safe” due to a variety of factors. Again, not only have these projects seen sustained volume in this bear market, but in theory they would be the first to reap the benefits of an ensuing bull market as profits generally rotate into the blue chips before circulating to smaller cap projects. If blue chips and locking up loads of liquidity aren’t quite your kind of play, researching NFTs on other popular Layer 1’s or Layer 2’s could prove a useful endeavor. We have recently seen the advent of “Solana Summer” and with the popularity and awareness of other chains increas- OG Member: CryptoFD I think a good place to start is to get a better understanding of your experience within Crypto / Web 3 space. Walk us through how you started out. I started my crypto journey by buying litecoin around $100 before it ran up to $400 in late 2017. After that I dabbled in a bunch of other altcoins and lost interest for a while after the big crash in 2018. My first NFT mint was Deadheads. I was very skeptical of the whole idea of NFTs and their cost. My next play was The Wicked Craniums. I loved the art and am still holding to this day. The rest is history. You’ve been here since MVHQ mint, how instrumental do you think having this community to learn and grow with has impacted you? I would not be where I am today without MVHQ. The amount of knowledge in the group is unmatched. What is cool is the group includes beginners in the space all the way up to whales who have a lot of knowledge. The majority of members have always been very helpful when someone has general questions or questions about a stuck transaction, etc. A lot of my biggest plays I would have been too late to the party if I wasn’t in an alpha group like MVHQ. Some stealth drops that have been dropped in chat were HUGE wins! Any memories/moments that stand out from VC/ Night Crew, etc.? There are a lot of great memories. Some were great from the flip perspective and some were great for just the laughs alone. A more recent memory was the Yuga land drop. I know this ended badly for some but while hanging in VC I noticed how many people were helping others. So many people had stuck transactions and were needing help and MVHQ really shined here in helping others. Do you have any favorite niches within the sector that you're particularly keen to collect or focus on? Land, Play-to-Earn, Art, PFPs? I put my biggest bets on teams in this space. This market is changing constantly and if I know who the team is it makes it an easier long-term hold for me. You’ve seen your fair share of bulls/bears, any advice you’d give to someone who is new to the space and experiencing this for their first time? PATIENCE. This is something I have struggled with and it is vital. If you get impatient you can make some silly plays in the moment. Just because you make a bad play doesn’t mean you are doomed. There is always another big play around the corner. Just don’t jump too soon out of impatience. Conviction, in my opinion, has proved to be the biggest ROI in this space. (Continues from page 11) ing, it presents an interesting opportunity to get in on the ground floor of exciting and innovative new projects. If NFTs are not your flavor of the month there is always the coin trading and liquidity pool aspects that can be farmed for decent returns but that requires a somewhat different understanding and set of skills than NFT trading - and what a great time to learn those new skills! So what now? Are we done? Do we accept our new bear overlords until the inevitable heat-death of the universe? Of course not. I, however, can not answer this because if I could I’d be predicting crimes in the year 2054 with Tom Cruise. Instead I will leave you with a horribly butchered quote with no source. “You have to get comfortable being uncomfortable.” I first heard this many years ago and again more recently from GM of the Philadelphia 76ers, Daryl Morey. I’m keenly reminded now of this quote and it gives me a surprising sense of calm. Make no mistake this bear market is uncertain, flighty, and the opposite of consistent. This market makes me uncomfortable. And that’s okay. I don’t have all the answers. I will experience new situations and not have all the information to handle them effectively. And that too is okay. I’ve begun working on and improving myself, finding new ways to stay profitable, and most importantly getting comfortable with this strange new world. So, all that being said, who’s ready to get a little uncomfortable? INTERVIEW WITH AN OG by HeartofTexas 12 Thank you for joining us today, CryptoFD. We are excited to learn about your experience within Metaverse HQ! Spring '22 Merch MVHQ Team Flannel NFFA Tee Hooded Sweatshirt & Pants Eyes Forward Tee Hooded Anorak "It's DANGEROUS to go alone! Take this!" by Laserweims Chapter 1: Building Habits Living in 2022 I’m sure most of you have heard the term “mental health” thrown around a few times. Whatever your point of view on the subject, I ask that you look at the topic with an open mind. Similar to reproductive health, digestive health, etc., our mental health is a mix of nature/genetics and nurture/action. We can’t control our susceptibility to mental health problems but we can control the actions that we take to overcome them. Why should you care about mental health? We’ve all dealt with the constant stresses of the NFT market - “I sold and it mooned.” “I should’ve sold.” “Should I FOMO right now?” “It’s a rug.” “Zaga did what?” “Aoki bought?” “Why didn’t I buy 30 goblins?” You get the picture. Without mental health tools, these stresses pile up and negatively affect your trading ability. Not to mention they negatively affect your relationships, physical health, sleep, decision-making etc. The good news is, just like Ronaldo perfected his “chop”, you can intentionally practice behaviors that will sharpen your ability to control your mind and your life. Whether you identify as 14 having mental health struggles or not, your brain can always be improved. It’s all about tricking and outsmarting your own brain. Make sense? No? Good, let’s continue. My goal of these articles is to provide quick, digestible information on tools that I’ve used in my mental health journey. From bouts with loneliness, panic attacks, anxiety, depression, medication, these are the things that have brought me peace and control in my life. At the end of each article I’ll leave you with something to practice. Before I get into tools in subsequent articles, I want to introduce habits. Much like drills on the football pitch, (two awful soccer references - no American, I swear I’m not officer) it takes repetitive action to see results. A habit consists of a cue, response, and reward. The “better” the reward, the easier it is to make a habit. Let's take degen minting for example. The cue is someone in VC says “there’s a free mint called the ‘Flipped AI Fast Food Worthless Pieces of Shit’ minting right now. The response is mint x100. The reward is you get to make some ETH (?), 15 show off your pulls with your friends, make jokes about how ugly they are, etc. So how do we create new habits? Intentionally perform a response and focus on the reward. If you want to exercise more, maybe you reward yourself with an ice cream every time you make it to the gym. Rewards are tricky though because they can create more habits (needing ice cream every time you work out). An arguably better reward would be getting ice cream once Monthly Excercises per week. Although these are both rewards that might help you create a new habit, they are both extrinsic rewards or rewards that come from an outside source. A better, intrinsic reward to focus on is how good you feel from pushing yourself to do something that wasn’t easy. And I mean focus on it. Sit there for 5 minutes afterward basking in how jacked you are. Let yourself feel good about it. This will make performing the intentional response much easier until it no longer feels intentional. Brainstorm all of your habits. Think about the cues, the responses, and the rewards. Choose one habit that you would like to start. Reading, exercising, playing video games, anything that helps you. Diligently create a cue, response and reward. E.g., 10pm is my cue. My response is to close my laptop and fire up League of Legends My reward is I had fun, de- stressed, had some human interaction, etc. Focus on and think about how awesome the rewards are. Practice this new habit daily until it’s harder to stop than it is to start. 1 1 1 2 2 2 3 3 3 4 4 4 5 5 5 The Luna Eclipse One stablecoin’s failed attempt at base money By Tyler.Scharf 16 Total capitulation of an $18 billion stablecoin, systemic risk as nearly $500 billion wiped off the total crypto market cap, Bitcoin down 25% percent in the matter of four days... just another week in crypto. This marks the fifth major crash we’ve seen in the crypto space and the biggest capitulation since the covid crash in March 2020. But while the covid crash was a global, marketwide crash, Luna and UST has been contained to the crypto sphere. UST is a stablecoin in the Terra ecosystem that is pegged to 1 USD. It was widely known for its too good to be true fixed yield of nearly 20%. Stable, No Stable Stablecoins solve two very important problems in the crypto space. Firstly, they provide a bridge between volatile cryptocurrencies and fiat currencies. Secondly, and even more importantly, they provide a safe and efficient global payments infrastructure that can effectively supersede the archaic banking system. The most widely known stablecoins on the market are USDT (Tether) and USDC (Circle). These are collateralized stablecoins, meaning that they are assumed to have enough assets backing them to promise a 1:1 redemption, even if the price dips below peg (USDT was trading below peg briefly after UST crashed but still managed to handle $7 bil in 1:1 redemptions). Now while collateralized stablecoins may sound safer because they are backed, they betray a fundamental ethos of crypto—centralization. These institutions can effectively censor indivi- duals by freezing their coins if they wish. Then there’s the question of scalability. The global FX market is estimated to have a daily volume of over $6.6 trillion while stablecoins have a market cap of only $170 billion. In order to take a signific-ant market share of that volume, an enormous amount of collateral would have to be locked up in a bank. Which brings us to our next problem: trust. Trust me, I’m stable! Placing our trust in the global banking system is no issue for most people, even though we are well aware that it would not be able to withstand a bank run due to the fractional reserve system (see Greek capital controls in 2015 for example). Stablecoins, however, are not so well established and therefore not easy to trust. We expect them to be overcollateralized so that such bank runs are impossible, which in turn leads to inefficient capital deployment. Safety over efficiency. UST was an algorithmic stablecoin created in an attempt at crypto native base money, with the hope of solving this issue. They created a triforce of flywheels, including protocol loops through UST and Luna, on-chain loops through Mirror (synthetic stocks) and Anchor (lending and borrowing), and off- chain loops through Chai and Memepay (payment networks). If enough people adopt it, and trust it, we won’t need to worry about over-collateralization, right...? So how an algorithmic stablecoin works new money constantly entering (which is On May 7, a cascade of sell orders knocked UST off its peg, starting with an $85 mil sell order from an anonymous address that happened conveniently at the same time Terraform moves $150 mil of UST out of the 3CRV + UST pool to deploy a planned pool. Low liquidity = high volatility. UST saw lows of 0.985 on the dollar that evening. LUNA also dropped by 10%, striking fear in the hearts of holders. Hence the bank run. Imagine having $100,000 of your savings staked in Anchor at a comfy 19.5% APR when all of a sudden it’s worth $98,500. Stampede for the fire exit. To make matters worse, as everyone was trying to redeem their UST, Terra’s chain got congested, withdrawals were suspended on multiple centralized exchanges, and collateralized positions, liquidated. When the dust settled LUNA was down from an all time high of nearly $120 to fractions of a penny and UST was trading at approximately $0.07. Then, as the Luna Foundation Guard sold 80,081 BTC and upward of 75k ETH to pr- 17 what is said to have saved the protocol in May 2021). There was an asset-liability mismatch—market participants are always just looking for the most is by using smart contracts to manage the supply in circulation. The particular model UST uses involves its sister coin LUNA—when UST dips below $1, UST supply is contracted and Luna is expanded to buy back the peg. When it goes above, UST is expanded and LUNA is contracted. Arbitrageurs are presented with an opportunity to restabilize the protocol by purchasing the cheaper asset and redeeming it for the more expensive one, pocketing the difference. However, LUNA is a volatile asset. This model cannot sustain such a high yield alone without efficient route to profit. The House of Cards otect the peg, this cascaded into the broader crypto market as a whole. Now if you’ve been following over the past few months, you probably saw the top signal from a mile away. It all started when an anon account on Twitter named @FreddieRaynolds was posting threads about how Luna could fail, and back in March, $22 million was escrowed in two separate bets between crypto Twitter influencers AlgodTrading GiganticRebirth and Do Kwon, the founder of Terraform (which has since been moved to FTX for unknown reasons). There have been several attempts at revival over the past few weeks, the most recent proposal having passed with airdrops of 30% unlocked at genesis and 70% vested over 2 years with a 6 month cliff for holders of 10k LUNA or less pre- attack. Protocols such as Astroport and Spectrum have signaled their interest to continue developing on Terra 2.0. Here Come the Regulators Now when a crypto ecosystem that’s half the size of Enron fails, regulators can’t help but take notice. Janet Yellen spoke about how stablecoins are not yet ”a real threat to financial stability” but have the potential to present further risks due to their rapid growth. The EU has renewed its proposal for a ban on stablecoins over €2 million from Facebook’s Libra days, which is effectively coercion against any protocol’s future attempts at becoming base money. Add this to Gary Gensler’s warning about how many other tokens will fail which will cause harm for retail investors, and we have a clear signal of regulation on the horizon. While many like to scowl at regulators stealing our freedom, we cannot deny that some informed regulation would help, especially when customers are being misinformed about what kinds of investment products they are being sold. When it comes to scams in Web3, I think Coolio said it best in his iconic 1996 anthem, Gangsta’s Paradise. Power and the money, money and the power Minute after minute, hour after hour Everybody's runnin', but half of them ain't lookin' It's goin' on in the kitchen, but I don't know what's cookin' " " Livin' in a Scammer's Paradise By MacUhtack The most common scams in Web3 18 Step two, use a burner wallet. A burner wallet is a wallet that has a very small amount of your capital in it. It doesn’t hold any of your high value assets. If this wallet gets compromised, the rest of your portfolio will be completely fine. 2. Step one, pause and read. In a world where speed matters, this is the hardest. Before sending any transaction, just take 5 seconds to read what you are about to send. This can save you a lot of heartache. There are two ways to prevent total annihilation of your portfolio. Scams are everywhere. This is the reality that we live in. Everyone wants to make money. Growing your bankroll researching new strategies, and taking calculated risks are fantastic endeavors. However, if the desire to make money goes unchecked, it can grow into unbridled greed. Out of this greed the scammer is born. They lust for your bags, and will do anything to move your money into their wallet (or they might just take your wallet outright). You have to keep your head on a swivel to survive in the Scammer’s Paradise. After all, if you don’t know what’s cookin’, then you might end up on the menu. Charles Ponzi - One of the most notorious swindlers of the 20th century. 1. The social scam is all about impersonation and trust. Whether on twitter or discord, it’s always worth double checking the actual username. On twitter, you can simply double check the @ of the person chatting with you. On Discord, it’s a bit more complicated, but you can enable developer mode, right click a user, and “copy ID.” You can then compare this set of numbers to verify that people are who they say they are. Honestly though, best practice is just to be especially skeptical of links that download files or try to connect to your wallet sent via private messages. This also applies to DMs regarding trading NFTs. You might get an offer and a link to trade NFTs on some website you have never used. This is most likely a scam. Another variation of the social scam is getting a DM directly from a project ac- THE SOCIAL SCAM Up first is the social scam. You are minding your own business, checking the floor price of some project that you’ll likely forget about in a few months, when you get a notification. It’s a private message. Wow, who could it be? It’s an influencer! You knew all those likes and replies would make some noise. Congratulations, you have finally been noticed. They tell you about a cool new website that can animate your NFT profile picture and they send you a link. You think, “This can’t be a scam since it’s from my favorite influencer, I’ll check it out.” You click the link. You connect your wallet and sign a transaction. You have been scammed. In the words of Michael Scott, “Don't ever, for any reason, do anything with your seed phrase, for any reason, ever, no matter what, no matter where, or who, or who you are with, or where you are going, or where you've been, ever, for any reason whatsoever.” DO NOT EVER GIVE YOUR SEED PHRASE TO ANYONE. Also, don’t keep any record of it in the digital world. If your computer or device is hacked, the hacker would have access to it. THE SEED PHRASE SCAM Your seed phrase is sacred. It is to be loved and cherish