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Where do we go from here?

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Where do we go from here?

Picking up the pieces from the collapse of LUNA, UST, and Terra

May 14, 2022
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Where do we go from here?

newsletter.banklesshq.com

Should we be scared right now? Raoul Pal joins us on this epic 90-min podcast. We were recording with him the moment UST started tanking and captured his reaction in real time.

Access this episode now if you’re a premium member. Everyone else… coming Monday.

Get Early Access to Should we be Scared?


Dear Bankless Nation,

It’s been a tough week.

If you're one of the people who suffered devastating losses in Luna/UST this week, I'm speaking to you: this is a setback, it is not the end. You will recover and come back stronger. So will crypto.

Take some time away from charts. Spend time with those you love. Go for a jog. Life is more than numbers on a screen.

This is a difficult lesson, but you can use this opportunity to become a better investor. All the best investors I know have battle scars.

For everyone else, this is a reminder that crypto investing is a game of survival.

To stay in the game you have to survive. We lose sight of this during bull runs when it seems like everyone else is making more money. The truth is your worst enemy is yourself...FOMO, jealousy, impulse.

But you are also your best asset. If you take the time to understand the fundamentals of this space and make the effort to develop a long-term investor temperament, you will leave this decade with far more wealth and freedom than you have today.

This outcome was avoidable. Many saw it coming.

Bankless can teach you fundamentals. But the conviction you must earn yourself.

I'll end this node with the words we say at the end of every Bankless podcast...

Crypto is risky. You could lose what you put in. But we're headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey.

- RSA


Where do we go from here?

Terra imploded this week.

Luna lost 99.9% of its value in a single week.

Crypto books will be written with chapters dedicated to this week. Researchers will dissect Terra in academic papers, filmmakers will make films, journalists will write about it, and government officials will weigh in.

This is the frontier

Projects in crypto break.

Crypto’s history is replete with such examples…Bitconnect, Iron Finance, Wonderland, and many more.

But the damage from these small experimental projects is usually small.

This time it’s different.

Before its collapse, Terra was a celebrated “Top 5” Layer 1 blockchain that hosted the third largest stablecoin in the ecosystem.

LUNA was widely considered a “blue chip” by leading crypto analysts and was led by highly reputable institutions like Three Arrows Capital, Pantera Capital, Coinbase Ventures, and much more.

Because the Luna Foundation Guard defended UST’s depeg by allegedly offing a billion-dollar war chest reserves of Bitcoin—which price is correlated with the rest of the ecosystem—it caused severe collateral damage with enormous knock-on impacts for the industry as a whole.

Its contagion effects are still rippling across crypto and will be felt for weeks to come.

Twitter avatar for @nosleepjon
NoSleepJon 💤 @nosleepjon
An entire ecosystem wiped out, just like that. Not sure we’ve ever seen anything like this.
Image
8:23 PM ∙ May 11, 2022
710Likes80Retweets

Hundreds of billions of capital has left the ecosystem. USDT saw signs of slight depegging (although it seems to be under control).

New precedents are being set around central exchanges.

Twitter avatar for @WatcherGuru
Watcher.Guru @WatcherGuru
JUST IN: Crypto.com is reversing profitable $LUNA trades from May 12th, claiming users “were quoted at an incorrect price."
crypto.comCrypto.com | The Best Place to Buy, Sell, and Pay with CryptocurrencyCrypto.com is on a mission to accelerate the world’s transition to cryptocurrency. Through the Crypto.com Mobile App and Exchange, you can buy 250+ cryptocurrencies and stablecoins, such as Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Solana (SOL) and etc. Purchase with a credit card, debit card, c…
1:57 PM ∙ May 13, 2022
3,213Likes685Retweets

🌕 For a detailed post-mortem of Terra’s implosion see our Luna Meltdown article


The Terra fiasco provides policymakers with a picture-perfect reason to accelerate its crypto regulatory efforts.

Amidst the chaos, US Head of Treasury Janet Yellen singled out the Terra debacle, doubling down on the need for a regulatory framework due to crypto’s risks to “financial stability”.

Twitter avatar for @scottmelker
The Wolf Of All Streets @scottmelker
Janet Yellen is talking about $UST… and her thoughts are arguably accurate. Regulators can’t help but drop the hammer when they see these things happen, for better or for worse. Shot ourselves in the foot this time.
2:26 PM ∙ May 10, 2022
479Likes87Retweets

We expect to see more of this talk in Washington and in government capitals around the world in the weeks to come. Our guest Raoul Pal seemed to agree that centralized stablecoins will come under increased regulatory scrutiny in the months to come.

What’s next?

Crypto is resilient. What doesn’t kill us makes us stronger.

Twitter avatar for @twobitidiot
Ryan Selkis 📖 🖊🔑 @twobitidiot
We just lost a $40 billion asset and it wasn't "too big to fail" so our overlords can pound sand on the "DeFi is a systemic risk to the financial system" garbage. I'll take a ruthless, anti-fragile system over a "safe" "well-regulated" one any day of the week.
1:05 PM ∙ May 11, 2022
2,347Likes300Retweets

Let’s use this as an opportunity to rebuild on a more decentralized and secure foundation. No shortcuts.

We’re going bankless.

Here’s what’s lined up next week:

  • Raoul Pal discusses the current state of crypto on the podcast (early access)

  • Kevin Owocki takes us into the world of ImpactDAOs 

  • Ben shows us the best yields on BTC and ETH

  • We’re getting some sun at Permissionless!

- Bankless

P.S. Are you an independent worker in Web3 needing healthcare & other benefits? Use Opolis! You get 1,000 WORK and 1,000 BANK when you join.


🙏 Sponsor: Polygon Studios—Fostering culture across Gaming, NFTs, and the Metaverse✨


Recap for the week of May 9th, 2022


🎙️WEEKLY PODCAST EPISODE

Listen to podcast episode | Apple | Spotify | YouTube | RSS Feed


ACTION RECAP 📚

READ 📚

  1. 📘 Hold me, I’m scared

  2. 📘 How to maximize your ETH staking yields

  3. 📘 Bankless BANNED from Youtube

  4. 📘 UST Terra Meltdown: What Happened? 🔥

  5. 💬 Open Thread: Is everyone okay?

LISTEN 🔊

  1. 🎙️ Timeless Wisdom for Crypto Investors | Jim O’Shaughnessy 🔥

  2. 📺 Playing the frontier metagame | Fiskantes

  3. 📺. Betting the fund on The Merge | Hal Press, North Rock Digital

  4. 📺. Rollup: Crypto bear market? UST Collapses, Instagram NFTs

  5. 📺. The 10K ENS Club | Alpha Leak

METAVERSAL 🧙‍♂️

  1. 📘 Azuki NFT drama

  2. 📘 Decentralized Society (DeSoc) Explained

BANKLESS DAO 🏴

  1. 📘 NFTs clear $10B in Q1

  2. 📘 You are not sufficiently bullish on Bankless DAO

OVERPRICED JPEGS 🖼️

  1. 📺 The full Aku story with Micah Johnson

  2. 📺 Moment of Zen(eca): Surviving the Bear Market & Good Vibes

GREEN PILLED 🌳

  1. 📺 DoinGud with Manu Alzuru


Weekly Subscriber Perks 🔥

Bankless Premium Members get access to perks like these:

  • Early Access: Should we be scared right now? | Raoul Pal

  • Full Access: Hold me, I’m Scared

  • Exclusive: Debrief following our episode with Jim O’Shaughnessy

Launch your own raffle for Bankless Badge holders! Go ahead. We can’t stop you.

Get Bankless Badge


🎙️ NEW LIVESTREAM

Listen to podcast episode | Apple | Spotify | YouTube | RSS Feed

We’re now live streaming State of the Nation—join us at 2pm EST every Tuesday!


🗞️ Latest Weekly Rollup. Download the week in crypto to your brain in this 25 min show.

Listen to podcast episode | Apple | Spotify | YouTube | RSS Feed


Jobs opportunities 🧑‍💼

✨ See all listings on the Bankless Job Board✨

  1. Marketing Manager at Wanderverse Inc.

  2. VP of Engineering at ZKX

  3. Head of Growth at ZKX

  4. Lead Community Manager at CryptoSkulls DAO

  5. Senior Product Designer at Parcel Inc

  6. Ethereum Core Developer at Nethermind

  7. Golang Engineer at Nethermind



Go Bankless. $22 / mo. Includes archive access, Inner Circle & Badge—(pay w/ crypto)


🙏Thanks to our sponsor

POLYGON STUDIOS

Polygon Studios is on a mission to help build digital culture, play-to-earn gaming, NFTs, and the Metaverse ecosystem on Polygon. Some of the key projects supported by Polygon Studios include The Sandbox, Skyweaver, Big Time, Crypto Unicorns, and Decentraland—among others. Polygon Studios also helps fundraising & onboarding. Check it out here.

Stay updated on the latest amazing gaming, NFT, and metaverse projects:

👉 Join the Polygon Studios Discord

👉 Follow Polygon Studios on Twitter


Want to get featured on Bankless? Send your article to submissions@banklesshq.com

Write for Bankless


Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.


Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

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P.J
May 14, 2022

As usual, regulating something that they don’t understand, Yellen and Powell are the worst. Can you suggest a better alternative to banks?

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