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Posted 19 mins ago | by Catoshi Nakamoto
Inflation and consumer demand boosted retail spending by almost 1% in April; Investors withdrew over seven billion in USDT, renewing fears of Tether depegging from the dollar; and while Do Kwan submits another proposal to revive the Terra Network, he and Korea’s exchange officials are called into a parliamentary hearing to find out the cause of UST’s depegging, and LUNA’s crash.
My name is Frankie Candles, this is your nightly crypto news wrap-up. Let’s get it.
Retail sales were up last month, falling just short of the Dow Jones’ 1% estimate. The numbers aren’t adjusted for inflation, and the increase was propelled by a 4% gain in miscellaneous retail spending at a 2.1% increase in online shopping.
Despite rising prices, spending is staying the same, even as we see the biggest acceleration in prices the US economy has seen in years. The data shows that so far, consumers are able to handle rising inflation, but some categories suggest that consumers are dipping into savings to pay for consumer goods, and combat the decline in real wages.
LPL’s chief economist Jeffrey Roach says that if price pressures can decline enough, we could see an economic rebound in Q2.
With revised consumer spending numbers for March coming in higher than originally reported– 1.4% instead of the originally reported 0.5%–and overall spending numbers increasing 8.2% on a year-over-year basis, data is showing that the economy is growing, even despite rising inflation.
Tether slipped below its dollar peg on Thursday, which caused investors to withdraw more than seven billion dollars in Tether–putting the legitimacy of USDT reserves into the spotlight once again.
One week ago, the circulating supply was eighty-three billion dollars, and has since declined to seventy-six billion.
Algorithmic stablecoins, pegged assets that base their dollar peg on code, have come under fire after the collapse of Terra’s UST and the Terra network’s native token, LUNA. Tether is not an algorithmic stablecoin, but after a February 2021 settlement with the New York attorney general, Tether backtracked on its claim that each USDT is back 1 to 1 by dollars stored in a bank. Insead, it was revealed that the company relies on a range of assets for collateral, including unsecured debt.
In a twitter response to a user asking for an audit report, Tether’s chief technology officer Paolo Ardoino said they have redeemed seven billion dollars in the last 48 hours, and the stablecoin is fully backed. Ardoino also tweeted that Tether is working on an audit, and hopes regulators will push auditing firms to be more crypto-friendly.
The destabilization of stable coins has become fuel for regulators’ fire, who have already been calling for stablecoin regulation and warning of risks to financial stability.
Do Kwon has proposed a Terra Ecosystem Revival Plan 2 that will be put up for governance vote on May 18th. If passed, the Terra chain will fork into a new chain without the algorithmic stablecoin UST. Like Ethereum after its 2016 DAO hack, the current Terra chain will be called Luna Classic with the native token LUNC, and the new chain will be called Terra with the native token LUNA. The new LUNA token will be airdropped among Luna Classic stakers, residual UST holders and app developers. The Terra wallet will be removed from the whitelist airdrop, and Terra would become a community-owned chain.
He proposed 1 billion LUNA tokens in circulation, with 25% distributed to the community pool, 5% to developers, 35% for bonded and unbonded LUNA, 10% to Luna holders, and 25% for UST holders at the launch snapshot.
According to the timeline, all this would happen very quickly, with the new network launching on May 27th.
Meanwhile, Kwon has been summoned to a parliamentary hearing following the crash, and the South Korean Conservative Party has invited Do Kwon and the Korean exchanges involved to learn more about what happened.
The National Assembly’s Political Affairs Committee representative said that there are questions being raised about the behavior of exchanges during the crash, and bringing Kwon and exchange officials to the National Assembly will seek to find the cause of the crash and move forward with measures to protect investors.
That’s all I got! Be Blessed, Frankie Candles out.
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