A year goes by quickly, and the main conversation topics of even the most crypto-loyal are most likely directed towards Sam Bankman-Fried, the disgraced co-founder of the crumbling FTX empire pour. A question that is being asked by many people is whether they will ever get their money back. Currently, a bunch of crypto assets are stuck on exchanges and lending platforms going bankrupt after a series of major digital asset crashes.
“Crypto winter” is the industry term for the cold to hit the market in 2022. Then came the dreaded contagion. After the collapse of the algorithmic stablecoin TerraUSD, many major crypto companies collapsed like a domino effect including: Three Arrows Capital, Voyager Digital, Celsius Network, FTX, BlockFi.
Other blockbuster events keep coming, but not all of it is bad news – at least at first. The Super Bowl, one of the biggest sporting events in the US, is still filled with slick, celebrity-filled ads for crypto companies including Coinbase, Crypto.com, and FTX. There have been cryptocurrency conferences in the Bahamas and Miami, with Bitcoin futures discussion sessions by day and flashy parties by night. And the industry’s prominence has grown in Washington, as generous political activism and an army of lobbyists signal its growing influence there.
However, the price of cryptocurrencies continues to fall. Bitcoin – the largest digital currency by market value – has fallen by more than 60%, leading to a drop in the digital asset that has resulted in a total market value loss of about $2 trillion from the high achieved in November 2021. Bankman-Fried from what was described as the modern John Pierpont Morgan was arrested (later released on record bail) and charged with multiple counts including fraud. The price of NFT has also dropped back… earth.
One of the central tenets of cryptocurrencies and of blockchains is the idea of decentralization: No single entity is responsible and no single player can destabilize the rest. What 2022 has shown more than once is that the digital asset ecosystem is significantly more interconnected and centralized than even the largest participants may realize.
The Terra Ecosystem operates two main tokens: Luna, a digital currency, and TerraUSD (UST), a stablecoin that has managed to stay at $1 by holding the equivalent of the amount of Luna in circulation onion. In May, the UST began to depreciate from its dollar-pegged rate, eventually driving both currencies to zero. The wave from this market explosion that reverberated throughout the market set the stage for many cases more explosive in the following weeks and months.
Source: CafeF
Source: Vietnam Insider