He admitted to enjoying watching cryptocurrencies and businesses “die”. Karma seemed to have slammed into his face with the collapse of his Terra blockchain. However, Do Kwon’s megalomania emerges less damaged than the finances of its users. The co-founder even convinced the community to validate his much-maligned rescue plan.
Fake it till you make it. The aphorism of the fruitful imposture that is often attributed to startuppers seems tailor-made for Do Kwon. This 30-year-old graduate of Stanford, the prestigious university of Silicon Valley, passed in a flash to the giants Apple and Microsoft, had built a reputation on promises: to offer the world the least volatile and the most easily usable cryptocurrency. Prophecy had attracted 40 million users when his company, Terraform Labs, launched in January 2018.
It must be recognized that its ecosystem had quickly followed its fine words, Terra rising to second position in the world of decentralized finance (DeFi) blockchains. Its algorithmic stablecoin, the UST, was until recently in third place on the international podium of so-called stable digital currencies. And its Siamese token, the LUNA, hit a historic high in April at nearly $120 per unit.
Was the LUNA/UST eclipse recorded in the stars?
The rest is known, almost already entered the history books. The coupled fall of UST and LUNA has resulted in the bottom Terra becoming the Titanic of crypto. 50 billion of market capitalization disappeared in the “spiral of death”, this financial hemorrhage that many analysts had predicted for years. An evil inherent in the famous algorithmic stablecoins based on a paradoxically unstable mixture of code and financial engineering. However, Do Kwon had spent months ensuring that a liquidity crisis with its cryptocurrencies was unlikely given all the activity involving them.
A success that above all benefited the “master of stablecoins”, as Kwon always presents himself on Twitter. His fortune closely linked to Terra had swelled visibly, to the point of landing on the radars of the American stock market watchdog. A legal tussle is already taking place in New York courts right now to avoid having to honor a subpoena. It remains to be seen how its heritage will survive and whether Terra’s cryptos are definitely dead.
“Network Rebirth”really ?
Terra 2.0. This is the solution, the recovery plan imagined by Do Kwon and its developers to turn the page on the UST crash. In essence, it’s about creating a new blockchain, without the offending algorithmic stablecoin, Terra allegedly worth more than UST, insisted its co-founder. The old channel would be rebranded as Terra Classic and the new one would become a “fully community-owned” network. »
In theory, the Terra Team’s remaining cash assets should be redistributed to “smaller” investors based on what they held on the old chain and their seniority.
“ Let Terra die urged some critical observers, in ironic reference to the media hype of Do Kwon who, 8 days before the collapse, predicted the death of 95% of cryptocurrencies. ” But it’s also entertaining to watch companies die. “, he had seen fit to add. Letting the authors of a failing network coldly relaunch the same infernal machine with a few cosmetic alterations seems regrettable. Moreover, with the money of gullible victims who “ made the mistake of trusting Kwon in the first place “. It must be recognized that the recovery alternative is based on the decoupling of the LUNA and the UST while the latter was the centerpiece of the Terra ecosystem.
“ It won’t work. The new blockchain will have no value. It’s magical thinking », even taunted Changpeng Zhaothe boss of the world’s largest crypto exchange, Binance.
Do Kwon’s proposal was in any case submitted to the online referendum. At the time of writing these lines, the day before the voting deadline, some 284.5 million votes have been validated. The balance tilts in favor of the plan, at 65.8%. There are more abstentions (21.5%) than firm opposition with a veto (12.4%). The market is hardly moved. The UST is currently trading at $0.064 per unit and no longer weighs “ that $696 million. While its alter ego the LUNA, sinking to $0.00016 for $1 billion in market cap, is stamped as active “extremely volatile requiring the greatest precaution. »