From borrowing and lending platforms to synthentic equities to simply trying to build a stable proxy for the US dollar,
cryptocurrency projects have long attempted to reimagine traditional financial vehicles for the age of the blockchain
Now, after the values of both the Luna and TerraUSD coins have collapsed in dramatic fashion
something that in broad strokes resembles an old Wall Street tactic is being revived in hopes of saving the project behind them
as well as another money-raising tool favored by strapped companies, a PIPE, where stock is sold to institutions at below-market prices.
As the phrase implies, death-spiral financing is when desperate companies raise capital by issuing
a type of convertible bond that can lead to a flood of shares in the market, potentially dooming the stock price.
The last-ditch effort to save an insolvent company is so fraught with risk that modern Wall Street firms tend to avoid getting involved
though it’s been seen more commonly in recent years in the sketchy corners of the penny stock market.