A Story Of Conventional Finance Masquerading As One thing Else
The next excerpt was taken from the Nov 22 OpEd I had written for ChainSafe’s e-newsletter “Centralization Strikes Once more”. When you discover this content material participating, we might love your assist on our Substack! ❤️
I is not going to waste my reader’s valuable psychological capability on the well-documented FTX collapse. The whole lot concerning the debacle invokes inside me a way of vile contempt for unchecked centralization. Worse, FTX was the wolf in sheep’s garments — a corporation enjoying at decentralization theatre — an act we’ve sadly needed to see play out in semi-automatic bursts. First, with Luna/UST, after which adopted by the incapacitating photographs of Celsius, Three Arrows Capital, Bancor, FTX, BlockFi… you get the image. (And I lengthen my condolences if you happen to had been in any respect caught within the crossfire.)
But, as one malicious program collapsed after one other, I noticed a group prop itself up in defence, aided by one of the vital highly effective power for public good ever created — the blockchain. Extra crucially, the 2 aforementioned mixed to allow a sobering self-examination: why precisely are we constructing this tech? Who’re the unhealthy actors? What had been the warning indicators? And the way can we do higher? That is, in truth, the bull case for FTX. Permit me to clarify.
The FTX collapse noticed unprecedented participation from the web3 group in citizen journalism. Whereas conventional media retailers wrote softball puff items in service to their overlord SBF, the Twitter and Substack sleuths got here out to play ball. Scores of citizen journalists unearthed, noticed, tracked, and shared an unrelenting quantity of information, with around-the-clock protection that might put any TradMedia to disgrace. No stone was left unturned, as conspiratorial-level connections had been found between FTX and the institution — together with SBF’s mother and father and regulators just like the SEC’s Gary Gensler and US Senator Elizabeth Warren. FTX made means for one of the best of us to shine throughout crypto’s Lehman Brothers second.
In fact, none of it will have been doable with out the virtues of the at all times on-line public ledger of on-chain report. This, of us, is “privateness for the weak, transparency for the highly effective” manifested: a tiny preview of what it might imply if we bridged our most essential establishments on-chain — the place actions like monetary transactions are transmitted and recorded in a clear and verifiable means. Is that this not a public good value preserving? It allowed our citizen journalists to trace the actions of funds between exchanges, comply with the FTX hack, and push the needle on improvements like necessary proof-of-reserves and proof-of-liabilities.
And as instructed earlier, these forces allow an important stage of self-scrutinization. It empowers us as a group to ask the essential questions, maintain our establishments trustworthy, and demand the continued evolution of our area. Within the well-trodden analogue of web3 as an natural, emergent organic ecosystem, the forest fireplace performs an important position in stimulating new progress. It clears away the diseased, the stagnant, the hole in an unforgiving hellfire. Simply because the earlier forest fireplace cleared away ICO-era zombie tasks which made means for newer species like Gitcoin to thrive, this hearth can even clear away parasites of the FTX-variant and supply valuable fertilizer for newer types of coordination tech.
That’s the silver lining. The whole lot of the response has been nothing in need of an unimaginable factor to witness, and is one thing that we should always anticipate for future on-chain catastrophes. We’re speedrunning black-swan occasions and naturally deciding on for the strongest organisms to outlive. The ’08 monetary collapse managed to forge a brand new path in humanity’s tech tree. In comparable trend, we too will come out of this for the higher as a united group underneath the banner of decentralization.
