Apollos Moonshots: Strength in Maker, Convex opportunity and LUNA-crash silver linings
Categories: Crypto News US
The Terra LUNA implosion sent shockwaves right across the crypto landscape, and if you hold digital assets of any kind, your portfolio’s definitely felt it.While Apollo Capital’s funds didn’t go unaffected, the firm says its risk-management framework was at least able to contain the losses and successfully limit the damage. That, and the fact that the vast majority of its DeFi based investments are centred around Ethereum, with not so much placed into rival networks.In a blog post, Apollo recently shared its perspective on exactly what happened with the UST dollar-depegging and the fall of LUNA, as well as details about how they swiftly moved into damage control. Moving beyond this “Black Swan event”, David Angliss confirms the Apollo team has de-risked its exposure in its market-neutral funds and have exited other stablecoins that might be considered to carry similar risks to UST. “We’ve increased our positions in fiat-backed stablecoins and Dai, away from the more experimental undercollateralised algorithmic stablecoins,” Angliss told Stockhead in a chat late last week.“One thing the Terra event has shown is that Dai (DAI), the longest-running decentralised stablecoin, is still the strongest,” Angliss emphasised. In the midst of the widespread fallout, in which some other stablecoins (briefly including Tether) also managed to depeg, Angliss said that MakerDAO (MKR) has managed to turn crisis into opportunity, returning to the top of the TVL (total value locked) rankings for DeFi systems.Based on Ethereum, MakerDAO is the protocol that issues the Dai stablecoin and facilitates non-middleman collateral-backed loans (in the form of ETH and other tokens), which is a system that serves to back the value of the token and maintain its US dollar pegging.“It’s not completely without fiat backing,” points out Angliss, “as a large part of its collateral is in the form of USDC [about 34% at the time of writing]”. That said, collateralised debt is a very different system from the likes of the centralised, fiat-backed USDC and USDT, and also very different from Terra’s collapsed LUNA/UST protocol.As Angliss says, MakerDAO’s return as the DeFi king is very much “a case of time in the market beats timing the market”.“Moonshot” opportunity? Like just about every cryptocurrency, the MKR governance token is a very long way down (-77%) from its all-time high. It’s currently changing hands for US$1,434 and peaked around US$6,292 about a year ago.But maybe it’s more of a down-to-earth shot. Angliss believes what’s happened represents “a reality check moment” for the industry and that Maker’s strong return to favour proves that “sound fundamentals matter in the long run”.