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Crypto Startup Attempts to Recover From Luna Disaster


coinquora.com 21 May 2022 10:48, UTC
Reading time: ~2 m

Stader Labs, a Bengaluru-based company that develops software for cryptocurrency trading and analysis, was one of the many crypto firms caught up in the Terra (LUNA) and UST crises.

Stader has created a profitable business by providing a platform for staking, in which token holders allow their tokens to be used to help verify transactions on a blockchain in exchange for a return on their investment. Almost all of that revenue came before the fall of Luna, which, like TerraUSD, ran on the Terra blockchain and hit an all-time high in early April.

When TerraUSD (UST) fell from its 1-to-1 peg to the US dollar this month, it dragged Luna down, affecting Stader’s company. According to data from industry analyst DeFi Llama, the total value bound on its protocol has plummeted to $50 million from around $750 million immediately before the incident.

Amitej Gajjala, CEO of Stader, said the drop in value forced the company to temporarily shut down its staking operations and lay off staff. “It was a big shock for us,” Gajjala said in an interview. The CEO added that the company is now trying to pivot by focusing on other assets, including those pegged to the euro and Japanese yen.

Gajjala’s experience demonstrates the dangers that exist in the decentralized-finance realm, where crypto holders borrow, lend, and stake coins without the use of intermediaries, such as banks. Luna’s price has gone close to zero as a result of its UST connection, making staking on platforms like Stader obsolete.

The collapse of LUNA and UST has reduced the aggregate market value of the cryptocurrency industry by $830 billion. Non-fungible tokens (NFTs), decentralized finance (DeFi) platforms, and web3 applications have all lost value as well. Several prominent firms are now accounting for crypto assets on their balance sheets. As a consequence, the worth of cryptocurrencies has dropped.


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