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”. In the event you discover this content material participating, we might love your help on our Substack! ❤️
I won’t waste my reader’s valuable psychological capability on the well-documented FTX collapse. Every part in regards to 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 pictures of Celsius, Three Arrows Capital, Bancor, FTX, BlockFi… you get the image. (And I prolong my condolences in the event you have 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 some of the highly effective pressure 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 have been the warning indicators? And the way can we do higher? That is, the truth is, the bull case for FTX. Permit me to elucidate.
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 have 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 manner for one of the best of us to shine throughout crypto’s Lehman Brothers second.
In fact, none of it could have been potential with out the virtues of the at all times on-line public ledger of on-chain file. This, people, is “privateness for the weak, transparency for the highly effective” manifested: a tiny preview of what it may imply if we bridged our most necessary establishments on-chain — the place actions like monetary transactions are transmitted and recorded in a clear and verifiable manner. Is that this not a public good price preserving? It allowed our citizen journalists to trace the actions of funds between exchanges, observe the FTX hack, and push the needle on improvements like obligatory proof-of-reserves and proof-of-liabilities.
And as steered earlier, these forces allow a vital stage of self-scrutinization. It empowers us as a group to ask the necessary questions, maintain our establishments sincere, 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 a vital 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 manner 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 is the silver lining. Everything of the response has been nothing in need of an unbelievable factor to witness, and is one thing that we should always count on for future on-chain catastrophes. We’re speedrunning black-swan occasions and naturally choosing for the strongest organisms to outlive. The ’08 monetary collapse managed to forge a brand new path in humanity’s tech tree. In comparable vogue, we too will come out of this for the higher as a united group below the banner of decentralization.
