- GSR is one of the oldest and largest market makers in cryptocurrencies and is deeply embedded in the ecosystem.
- The co-founder explains how Terra’s collapse and bear market are affecting the strategy of large corporations.
- He explains why it can create demand for new blockchains and share little-known chains.
Terra ecosystem $33 billion market capOn May 7th, the depegging of the algorithmic stablecoin UST began to collapse, and market participants questioned whether this would become the cryptocurrency’s “Lehman moment” and many major players were caught in the collapse.
Richard RosenblumThe co-founder and president of GSR believes the contagious effect has so far been limited.
“It hasn’t even been a week. [really]I haven’t really had a lot of contagion and I think it’s pretty concentrated,” Rosenblum said.
Many funds, including Arca, were hit by Terra’s collapse. UST doubled their positions as they started depeg.And Galaxy DigitalCEO and Founder Michael Novogratz Tattoos that refer to ecosystems.
Even GSR has a location on Terra, But Rosenblum said they weren’t “big.”
“We are very active in DeFi and we believe that part of it is our duty as market makers,” said Rosenblum. “We want to provide
It can be seen on both centralized and decentralized exchanges, and we see it as part of our core knowledge base.”
Even for players with bigger positions to lose billions of dollars, Rosenblum explains that this is minimal compared to a broader portfolio.
“Even if the investment community was hurt and they were in a fairly concentrated position, they had money to lose and I think they are a group that has been very successful over the past few years,” said Rosenblum. “And it doesn’t seem like there was that much of an impact on the space as a whole.”
Rosenblum said that the decentralized protocol has overflowed because many investors and market markers have oversubscribed. He expects this will translate into a more thoughtful approach to looking at whether or not there is a sound business plan.
Already, the decentralized financial ecosystem has begun to significantly slow down.
“I don’t think it has anything to do with LUNA, it has to do with the private and public markets being hit for the first time in years,” Rosenblum said.
One example of this move towards a more robust business model is the activity surrounding: MakerDAO in the current bear market. Recently climbed to number one. DefiLlama’s Total Value Fixed Leaderboard.
“[MakerDAO] It wasn’t always a very sexy project in 2018,” said Rosenblum, who described the reaction to the project when it launched the algorithmic stablecoin DAI.
MakerDAO is a decentralized lending platform that allows individuals to lend and borrow cryptocurrencies. The ecosystem uses DAI, an over-collateralized stablecoin, to determine lending rates.
“The concept of having algorithmic borrowing and lending tools was new at the time, but we haven’t done much since then,” said Rosenblum. “And I think their product has stood the test of time because it’s rather simple compared to grand schemes like Terra. But I still think it’s doing its job and it’s working.”
Rosenblum emphasizes: Maker’s Token (MAKER) It is one of the few that has traded upwards over the past week or so.
“It was a very difficult period for that type of investment because stocks and bonds were going down together,” Rosenblum said. “During a period like this, cryptocurrencies are a very new asset class, so it’s hard to expect there to be a diversification. It makes sense to have room to give some back.”
to see the surprise
In crypto this year, Rosenblum expects some really new ideas to come to market to create a revival of interest like the one that occurred in “DeFi Summer”.
One of the catalysts expected in the market this year is Ethereum “merging” into the proof-of-stake consensus model, with a planned airdrop for the highly anticipated Layer 2 Ethereum scaling solution.
Crypto prop shop Dexterity Capital co-founder Michael Safai expects developers and investors to return to the safety of older protective blockchains like Ethereum and Bitcoin in light of the collapse of Terra.
Rosenblum disagrees and instead believes this will “open the market desire for new layers”.
“Now there are a lot of open avenues to not only compete with Ethereum, but to provide value in the space,” he said.
“I think there is room for a few more blockchains to be successful this year,” he said.