It had to happen during Yoann Lopez
‘s holidays… The world of Web3
is in turmoil, even boiling! A glossary
before reading the rest if you don’t know the words Blockchain
, and other DAO
Terra and Luna’s story
🌍 It sounds like a sci-fi or dystopian name from super long ago, but Terra
that have been in the news quite a bit this week. Basically, it’s 2 cryptos, one on the market and one anchored to a traditional currency (1 Terra
will always be worth $1 of Luna
), and the system allows Terra to stabilize around $1… until Luna drops to zero. Matt Levine from Bloomberg
explains it very well here
(if you’re blocked by a paywall, a summary here
). What happened when Luna fell from $70 to less than $1 in a week is called a death spiral
(that’s apparently the technical term).
₿ In anticipation of this kind of stuff, the Luna Foundation Guard had been buying Bitcoins so that they could buy back Terra and prevent its price from collapsing - and thus guarantee the value of Luna. So the foundation sold lots of Bitcoins… and the domino effect did the rest? Not only that, because there’s a lot of other stuff going on in the market, but well, you know it’s not going in the right direction, if you have Bitcoins (disclaimer: I don’t).
📉 Actually, the fall of cryptos
started before the stablecoin story. A pretty crazy crash, since we’re talking about losses of $800 billion in 1 week
, the crypto exchange platform, devolved as well, and some billionaires… are still billionaires, but with 90% less billions
🇫🇷 (which means they had room to spare).
😶🌫️ The crypto model, which was supposed to be freeing us from traditional systems, is therefore subject to the same variations as the classic market, caused by the same psychological springs: trust - or loss of trust.
I don’t know much about it, but like Warren Buffet
, I have a hard time with this thing that is so out of touch with real and tangible value creation
🇫🇷. Still, it’s going to rock all over the place, so some media outlets are offering some advice
if you have investments. And the tech
year might be tough
I won’t include all 30+ articles I’ve read that say more or less the same thing, but I loved the intro to this one
: “Winter is not coming, Jon Snow. It’s here