Yes, this is another piece about the craziness that is the Terra ecosystem implosion, but I think it will be an enlightening one. I came across this tweet below today and it really struck a cord with me because it so succinctly explains one of the main reasons people call out things like algo-stablecoins and other dangerous speculation-based games in crypto.
Generally, law enforcement and regulators aren’t too concerned about things if they are limited in scope. To use MiniMoon’s example from above - gang violence among gangs is a nuisance and not something that the general public really cares about since it doesn’t involve them (in the normal case). Though sometimes that violence will bleed out into the general public and then they will cry out loudly for help from the powers that be. This normally leads to increased enforcement, regulations and increased scrutiny of the offenders.
Now, with the UST implosion, regular people have been absolutely wiped out and will want to be made whole in some way or have justice be served. Politicians that were already vying to regulate stablecoins will use this as ammunition in their crusade and also use it as a way to drum up public support for tighter regulations on crypto. No one really wins in this situation and we are probably worse off than we were before - though I am very glad UST fell apart now rather than when it was much bigger.
This also should renew calls for us all to build truly decentralized systems from the contract layer to the front-end layer. If we build things that quite literally can’t be regulated, can’t be shut down, and can’t be centrally controlled - then we are in a much better position for when the regulators make a concerted push into this industry. Of course, this is easier said than done as most projects in crypto are not ready to decentralize yet, but we really do need to speed up this process if we hope to survive the coming onslaught.
I hope that the ecosystem can heal after the events of the last few days and I also hope those responsible are held to account. If we just give them a pass and let them move onto their next “project”, then we are no better than the centralized power-hungry entities that we are vying to replace. So as I said yesterday, let’s all strive to do and be better.
Have a great day everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.