{"id":524360,"date":"2022-12-10T03:28:53","date_gmt":"2022-12-10T00:28:53","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/lessons-we-learned-from-the-terraform-ftx-implosions\/"},"modified":"2022-12-10T03:28:53","modified_gmt":"2022-12-10T00:28:53","slug":"lessons-we-learned-from-the-terraform-ftx-implosions","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/lessons-we-learned-from-the-terraform-ftx-implosions\/","title":{"rendered":"# Lessons we learned from the Terraform-FTX implosions"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2dcedd6b8ad\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2dcedd6b8ad\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/lessons-we-learned-from-the-terraform-ftx-implosions\/#%E2%80%9D_Lessons_we_learned_from_the_Terraform-FTX_implosions_%E2%80%9C\" >&#8221; Lessons we learned from the Terraform-FTX implosions &#8220;<\/a><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_Lessons_we_learned_from_the_Terraform-FTX_implosions_%E2%80%9C\"><\/span>&#8221; Lessons we learned from the Terraform-FTX implosions &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div class=\"post-content\" data-v-30a6cf80>In May 2022, Terraform Labs\u2019 LUNA cryptocurrency and TerraUSD (UST) stablecoin collapsed, triggering a massive shock in the crypto industry. Six months later, the bruised industry took another hammering as one of the largest cryptocurrency exchanges, FTX, filed for bankruptcy protection and billions of dollars of user assets went missing. The FTX empire, once valued at more than $30 billion, fell to zero in fewer than 10 days.<\/p>\n<p>FTX reportedly has more than 1 million creditors, most of whom are retail investors who were convinced that FTX would not collapse and had been keeping their assets on the exchange. Taking a look at Mt. Gox in 2014 \u2014 whose creditors still failed to reclaim compensation \u2014 FTX may be a repeat of that mistake.<\/p>\n<p>It can be said that FTX succeeded because of Alameda Research, and failed because of Alameda too. An investigative report led careful users to uncover serious problems with Alameda\u2019s balance sheet, which then led to a deeper dive into its unclear, unexplained financial dealings with FTX.<\/p>\n<p>Many well-known venture capital and crypto companies have also been caught in the trouble. Sequoia Capital, Temasek and others announced that they were making their investments in FTX down to zero; BlockFi, a crypto lending platform, has filed for bankruptcy due to its exposure to FTX; and crypto broker Genesis, a subsidiary of Digital Currency Group, is on the verge of bankruptcy due to a liquidity crisis and may not be able to repay investors\u2019 funds.<\/p>\n<p>When the crypto tide ebbed, we knew who was swimming naked. After the craze, the market is left in a mess.<\/p>\n<p>The collapse of FTX provides a precious opportunity for all users, practitioners and lawmakers to reflect on the problems and reinvent the crypto industry.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>What Paul Krugman gets wrong about crypto<\/em><\/strong><\/p>\n<p>I don\u2019t think we should blame the FTX failure on cryptocurrency itself. It doesn\u2019t mean that the emergence of Bitcoin (BTC) and the crypto industry was a mistake. We should be thinking about the business models that cryptocurrency exchanges run and how to effectively decentralize governance, etc.<\/p>\n<p>The overturned cart ahead is a warning to the ones behind. The implosion of exchanges is mainly attributed to their untransparent funding disclosure. We have seen that the top cryptocurrency exchanges \u2014 including Binance, OKX and Huobi Global \u2014 have announced their fund reserves to prove their security to ensure the interests of users.<\/p>\n<p>The shock of FTX\u2019s bankruptcy still needs much time to be digested, and the crisis will not stop here, but I believe in the unstoppable bursting momentum of the crypto industry.<\/p>\n<p>The crypto industry has its twists and turns as it develops, but its future is promising. While 2022 is a particularly tough year for the crypto space, it will continue to grow, evolve and look for a way out amid the skepticism.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>From the NY Times to WaPo, the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a> is fawning over Sam Bankman-Fried<\/em><\/strong><\/p>\n<p>With the COVID-19 pandemic raging and the global \u201crate hike wave,\u201d the crypto winter could be harsher and more prolonged than expected. Although we cannot precisely predict and estimate how long it will last, we can get over the difficulties together.<\/p>\n<p>As a journalist who has worked on the front line of the industry for many years, I have learned some deep lessons from the LUNA crash to the FTX collapse:<\/p>\n<ol>\n<li>If you hear any rumors about the insolvency of an exchange or a project, be sure to transfer your assets out as soon as possible. As an old Chinese saying goes, a true man won\u2019t stand beside a collapsing wall.<\/li>\n<\/ol>\n<ol>\n<li>Not your key, not your coins. This is a cliche, but it is also a truth. The only way we can protect our crypto assets is by keeping our own private keys.<\/li>\n<\/ol>\n<ol>\n<li>Cash is king when a crisis occurs. As bubbles burst and asset prices plunge, holding cash can make us safely survive the difficult period.<\/li>\n<\/ol>\n<ol>\n<li>Don\u2019t borrow money to invest, and don\u2019t leverage. For most people, borrowing and leveraging will only accelerate bankruptcy. FTX was not immune to this.<\/li>\n<\/ol>\n<ol>\n<li>Keep up with the industry by learning new things about centralized finance and decentralized finance, tokenomics, on-chain activity, how to use cold wallets, etc.<\/li>\n<\/ol>\n<p>Personally, I am a crypto enthusiast and supporter with a long-term vision for blockchain <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a>. The crypto industry has faced its darkest hour more than once. There\u2019s no making without breaking, and I hope we can regain our confidence and trust in the industry.<\/p>\n<p>After the FTX accident, <em>Cointelegraph Chinese<\/em> was the first to organize several Twitter Space conversations, inviting crypto veterans to discuss the impact and lessons of the collapse.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-12\/5a5b668d-a2a6-44d2-8652-545e1831a761.jpg\"><\/figure>\n<p>As a platform, <em>Cointelegraph Chinese<\/em> hopes to present the most timely, high-quality crypto <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a> to Chinese-speaking users so as to help them grow.<\/p>\n<p>In addition, <em>Cointelegraph Chinese<\/em> is always committed to helping and guiding crypto users to establish correct and scientific values while promoting the further development of the crypto space and Web3.<\/p>\n<p>Finally, a classic quote from the great philosopher Friedrich Wilhelm Nietzsche for those who continue to build: \u201cWhat does not kill me, makes me stronger.\u201d<\/p>\n<div>\n<div style=\"background: rgb(239, 239, 239); border: 1px solid rgb(204, 204, 204); padding: 10px;\"><strong>Tracy Zhang<\/strong> is the CEO of <em>Cointelegraph Chinese<\/em>. She graduated from Zhengzhou University before attending Paris-Sorbonne University for French Studies.<\/div>\n<\/div>\n<p><em>This article is for <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a> information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/lessons-we-learned-from-the-terraform-ftx-implosions\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; Lessons we learned from the Terraform-FTX implosions &#8220; In May 2022, Terraform Labs\u2019 LUNA cryptocurrency and TerraUSD (UST) stablecoin collapsed, triggering a massive shock in the crypto industry. Six months later, the bruised industry took another hammering as one of the largest cryptocurrency exchanges, FTX, filed for bankruptcy protection and billions of dollars of&#8230;<\/p>\n","protected":false},"author":1,"featured_media":524361,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/cdn-cgi\/image\/format=auto,onerror=redirect,quality=90,width=1200\/https:\/\/s3.cointelegraph.com\/uploads\/2022-12\/4aab349f-af8f-4ec9-9c42-7645c4fcf8f1.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[80542,74863,107431,135234,122378,117,4973,70610,73711],"class_list":["post-524360","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-cointelegraph","tag-cryptocurrencies","tag-cryptocurrency-investment","tag-ftx","tag-terra","tag-business","tag-china","tag-finance","tag-investments"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/524360","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=524360"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/524360\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/524361"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=524360"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=524360"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=524360"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}