Cryptocurrency

Op-ed: How Do Kwon, Terra could have set crypto back 10 years

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Fallout due to Terra’s collapse can be even more serious than we initially thought. I recently wrote an article claiming that the crypto industry is being attacked from different angles. Witnessing the current emotions within the community, I think it’s just the beginning.

Cryptography as a Ponzi scheme

Cryptography is called Ponzi schemes and scams by many No moneyer Over the years.Certainly there was exampleThe crypto industry has begun to receive actual institutional adoption over the past few years.

Indeed, my argument in my final editorial was based on the fact that the crypto industry justified itself as a threat to its existence to the current financial system. The threat raises concerns that central banks, the WEF, the IMF, and other traditional financial industries could lose control of the global economy.

I admit that a complete deviation from the traditional financial system could result in anarchy, but I think the current system is broken and needs to be rebuilt. In doing this, many of the wealthiest businesses and individuals in the world need to lose a more equitable distribution of wealth and financial freedom among 99%.

Fuel the fire against cryptography

However, the upcoming crypto winter could be the last opportunity for old security guards to play to manage digital assets such as cryptocurrencies and NFTs. The catastrophic event of the Terra Meltdown has directly wiped out more than $ 30 billion from the total market capitalization of crypto.

The additional fear, uncertainty, and suspicion (FUD) caused by the collapse further $ 160 billion Lost as the wider market softens. Investors of concern are beginning to ask their advisors how to manage risk in such scenarios.

BitewiseInvest CEO Hunter Horsley Said The biggest concerns of current advisors are:

–Regulation
โ€“ LUNA
โ€“ Coinbase bankruptcy scenario
-Use Case
– power consumption
โ€“ Impact of CBDC on BTC
โ€“ How many winners are there?

Just a few weeks after this catastrophic event, a new blockchain named LUNA was launched with a fully diluted market capitalization of $ 5.8 billion. Approximately 70% of the tokens will be allocated to Luna Classic and TerraUSD owners will bet automatically on their behalf, resulting in a circular supply of approximately $ 1.2 billion.

The bet tokens are entitled to “secure” the blockchain for 2-5 years. Any sane person will ask where this value comes from, and whether the tera ecosystem can essentially produce most of the $ 6 billion from thin air.

Terra money printer will be “brrrr”

The crypto industry is famous for comparing recent government actions with those of “money printers,” but how does this differ from the actions taken by the launch of LUNA 2.0? The lack of regulatory oversight and considerations for the nuances of launching an entirely new blockchain can be daunting.

Regulation is not bad in nature. The resistance to the regulation of the crypto community is most often done centrally. Cryptography promotes the dream of decentralized finance, and therefore it requires a form of decentralized regulation, otherwise everything is meaningless.

Even more worrisome is that it took less than two weeks to plan to rebuild the Terra ecosystem and then launch a new chain. This is insane.

The $ 6 billion ecosystem was theorized, voted on, and implemented in less time than it would take to get a $ 150,000 home mortgage in Manchester (trust the home!). Former banker Crypto World Josh comment,

“Did Terra create a new” Luna “coin just two weeks after the biggest meltdown in cryptocurrency history, costing more than $ 50 billion? How’s this?

Cryptographic regulations are definitely coming ๐Ÿ˜‚ “

There is no way this new project can be considered worth billions of dollars when little thought is given to its start. The Terra ecosystem relied on arbitrage between UST and LUNA.

One of its key value propositions has been removed because the new blockchain doesn’t contain any UST, but it still seems to be worth more than the New York Times ($ 5.7 billion). Ari Paul, Founder of Blocktower Capital, Said“I believe in the second chance, but the repentant scammer hasn’t returned to the old trick a few months later.” Terra has hurt the code more than we know.

Many call Terraform Labs CEO Do Kwon a scammer and a Ponzi scheme architect. Accusation!! In addition, those who originally called TerraUSD Pongee are now justified due to the significant losses accumulated by investors around the world.

However, as Ethereum founder Vitalik Buterin recently evaluated, TerraUSD did not have to end this way. The code wasn’t thoroughly considered and the model wasn’t tested rigorously enough. The mechanism used to hold the peg to the dollar relied essentially on positive market sentiment. As soon as the market lost confidence in Luna Token, everything else was destined to avoid it.

However, as a result, the concept of distributed stablecoin is essentially incomprehensible. Strict regulations have been introduced to completely ban automated stablecoin, making it more likely than ever to push cryptocurrencies away from innovation.

If TerraUSD had a small success before it failed, you might have seen it used as a test case for future automated stablecoin research. But this dream is probably dead. No one would want to be involved in a TerraUSD-like project again, and centralized finance would certainly help the movement.

I believe the last two weeks will set a precedent and then delay the crypto industry by a few years. I’m not the only one to make this claim.As Nick Carter tweeted soon:

“Terra has given MSM 10 years of great ammunition. A stable promise of dollars, retail losses, fintech to invest customer assets, VCs abandon the top and thrill. Is a reality. Historical L Yes, we deserve it. Completely failed self-defense. “

Terra’s fallout is not over yet.

It is undeniable that the collapse of Terra and DoKwon’s actions will have a long-term impact on the broader crypto industry over the years to come. Fallout is probably not resolved. Many exchanges, such as Binance, have not yet distributed Airdrop tokens to investors due to the technical complexity of consolidating new chains and properly distributing tokens to all investors.

Delays mean that investors holding tokens in their wallets are free to trade for days before other members of the community. If this happened in a traditional market, someone could be imprisoned for mismanagement of funds or unfair trading practices.

In addition, the liquid LUNA classic token has been replaced by the non-liquid LUNA 2.0 token. Only 30% of the tokens will be distributed to the owner and the rest will be bet automatically. Holders of these tokens did not agree to blockade their investment for years, but said the chain’s governance vote was not.

It is argued that a democratic process was carried out as the Terra community coordinated on-chain governance. Still, while there were 7.5 trillion tokens, only 200 million votes were cast in favor of moving to a new chain.

I believe the upcoming crypto winter will be used as a time to enforce centralized regulation in the area of โ€‹โ€‹crypto that poses the greatest threat to current systems. There are many FUDs claiming that this is to protect “mama and pop investors” and stop future Ponzi schemes. The average private investor is angry that no one is held accountable and is not afraid to lose his savings.Joe, also known as OLavasova, used Twitter to represent him Frustration;

“I hate regulation, but when I see the $ 40 billion Luna collapse, with no one responsible, jailed, and forbidden to be involved in future crypto projects, Luna In addition to the 2.0 launch, you’ll want to see cryptographic hardcore regulations. “

Some regulations may be good for the industry, but some are inherently bad and are disguised to deceive us into false reassurance. Remember why we believe in cryptography and look at both sides of the discussion when new regulations are proposed. Ask yourself, “Who is really trying to make a profit?”

If the answer is a centralized organization, it’s not there to protect you. It’s there to protect you.

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