In the wake of the most recent “black swan event”, the digital asset community finally has a chance to take a moment to catch its proverbial breath. While the cascading descent of the LUNA and UST dead cat bounce offers us a dramatic case study in poor decision-making at Terra and in the wider retail market, it also portends more potential difficulties for everyone moving forward. Precisely what it means, however, remains to be seen.
In a more rational world, the collapse would prompt a stern and immediate reappraisal of industry standards and practices by everyone in the space. From how projects function to how they are marketed to how they respond to real, existential problems, all should be fair game. The event provides us with a particularly relevant and timely example of how not to run a serious project.
Difficult Conversations
As the digital asset community comes to terms with the recent collapse of the entire TerraLUNA ecosystem, the harsh reality of its import and consequences has begun to descend upon everything associated with the technology. Like a pall cast over a sunny day, the entire cryptoasset space must reckon with the possible reality that the future may not be as bright as we hope.
The TerraLUNA Debacle offers us an object lesson on what not to do. Despite its size and genuinely interesting and novel use case, despite its meteoric growth, despite its adoption vector, this catastrophic multibillion-dollar failure provides us all with numerous examples of practices and behaviors that successful projects must avoid at all costs. As the space matures, we all should expect it to punish projects that refuse to learn from their own failures and those of others. As the bureaucrats in Washington, DC descend upon the space in a predictably over-reactive attempt to regulate matters it hardly understands, the space will only become more difficult to navigate.
Hard Truths
While the complete list of the Terra team’s failures would undoubtedly prove a long one, there are three that deserve special mention. Terra was not particularly unique or uniquely egregious on any of these failures. Rather, it was the sheer size and importance of the TerraLUNA ecosystem that made it exceptional. And therein lies the problem. These issues are endemic to the space. Not every project exhibits these issues, it is true. The sad fact, though, is that the problem is significantly more common than any of us would like to admit.
The most uncomfortable conclusion, the quiet part that no one wants to acknowledge, still needs to be said. LUNA and UST both worked exactly as designed and intended. There was a fundamental flaw in the project, and in algorithmic stable coins as an entire category in DeFi. That failure led to yet another massive mistake.
By failing to proactively and honestly educate the Terra community about the risks fundamental to the project, especially about its functionality and its inherent risks, the Terra team failed its most ardent and dedicated supporters. Anyone who was caught off guard by the collapse had never read the TerraLUNA whitepaper with any serious intention of objectivity, or they had and simply did not understand how LUNA/UST worked. Either they understood the problems inherent to algorithmic stablecoins, TerraLUNA in particular, and chose to ignore the well-documented risks and warnings anyway, or they were engaging in pure speculation, choosing to ape in without doing their due diligence.
While the old Latin aphorism “caveat emptor” must always apply, the Terra team nevertheless exhibited a stunning level of disdain toward its community and the cryptospace generally by failing to provide proactive, honest communication with the public. But even that mistake was the result of a deeper, more fundamental problem.
The hubris of Do Kwon and his team was the necessary and sufficient condition for the entire ̶p̶r̶o̶j̶e̶c̶t̶’̶s̶ ecosystem’s downfall, the unstable cornerstone upon which the rest of the dysfunction rested and from which all others extended. Do Kwon himself set the tone of the community by his behavior. Terra failed at design, implementation, and community outreach, a trifecta of failures that will inevitably doom any project. It was Do Kwon’s leadership that ultimately informed those failures, from top to bottom.
Ultimately, though, the failure rests upon the shoulders of everyone in the cryptosphere. We, collectively, enabled his bad behavior which ultimately led to the monumental foundering of Terra. At the end of the day, we as a community cannot expect anyone else to take digital assets seriously when we validate bad actors with unproven, fundamentally compromised designs by giving them our support.
Holding Ourselves To A Higher Standard
The primary takeaway thus far is as simple as it is harsh. We as an industry must take a good, hard look at the state of the industry and the extended space. With a cold, rational reassessment, we need to return to first principles. If the cryptocurrency community fails to do so, one thing is for sure. Until we all adhere to a higher standard of professionalism, the Terra collapse, rather than being an exceptional case of bad management, will become just the most recent in a long list of ever larger and more dire failures.
Adoption will no longer prove sufficient to assess the value or importance of a project. Real utility matters. Project integrity matters. Behaving in a serious and respectful manner, unlike Do Kwon’s now-infamous taunting of Wall Street and others, matters. Having a business plan matters. Listening to legitimate criticism and adjusting accordingly matters. These characteristics mark the difference between serious projects and those best left alone.
At the end of the day, the entire episode provides an object lesson in how not to run a project. More immediately, this collapse will almost certainly lead to a regulatory crackdown on algorithmic stablecoins specifically, and to the general digital asset space more broadly. Indeed, large components of the DeFi industry may end up on the killing floor as well.
While the Terra collapse highlights numerous common problems in the space, not every project exhibits such poor design, planning, or execution. Serenity Shield, for example, operates from a position of strength born of integrity.
Serenity Shield Is Different
One of the major problems with the digital asset space generally is a lack of much or any commercial vision. This problem reaches way beyond with TerraLUNA. Whether based on unproven, ponzi-esque tokenomic mechanics like Terra was, or the project has devolved into the cryptographic version of a science project like Cardano, neither approach promises much in the way of long-term commercial viability. By contrast, Serenity Shield approaches the market with commercial intent from the moment of inception.
Starting with our development and management teams, our community can rest assured that professionalism tops the list as the project’s lodestar. Instead of cheeky condescension, the Serenity Shield community can continue to expect the highest level of probity and competence from our entire team, and at all times. Community outreach and education are our highest priorities. Through educational articles and various other media, our website, as well as our Telegram and Discord channels, the Serenity Shield team will continue to implement our unique approach to providing informative communication with the market.
Unlike most projects that rely heavily upon the champagne wishes and lambo dreams of market bullishness and blind exuberance, Serenity Shield enters the space already well-capitalized by serious private financial backing. The importance of this cannot be overstated. Having sufficient capital reserves backing those reserves means Serenity Shield operates with a significant competitive advantage vis-a-vis almost all other emergent projects, day one. Rather than being forced by financial necessity to compromise professionalism and high standards just to keep the figurative lights on, Serenity Shield benefits from the sort of long-term vision and business plan that all serious projects require.
In addition to being properly capitalized, Serenity Shield has already developed numerous strong partnerships. The team will also have multiple other enterprise-level partnerships in place prior to launch. As covered in a previous article, found here, our list of partnerships already provides an indication of the seriousness of the project.
Furthermore — and unlike almost every other new project in the space — Serenity Shield will have established revenue streams in place based on our business plan soon after our public ICO. Unlike unproven, fragile concepts like algorithmic stablecoins, Serenity Shield’s fundamental use case is proven already. As the development team continues to develop the beta release of our DApp, investors can rest easy knowing that Serenity Shield has its community’s best interests at heart and in hand.
Lastly, Serenity Shield is designing our solution with extensive cross-chain compatibility in mind, providing added levels of robustness to the use case of our project. The importance of cross-chain functionality, particularly in light of the Terra collapse, cannot be overstated. By providing our users the ability to access their StrongBox from multiple chains, our users can rest assured that their financial futures are in the best hands possible — their own.
With An Eye To The Horizon
At Serenity Shield, our goal is to under-promise and over-deliver. Such an approach requires a mature appreciation of market conditions and sober assessment of the state of our own project, Technological expertise alone will prove insufficient. As powerful a technological solution as it is, it cannot solve every problem. Because the burden ultimately falls to us as a team, we have found that the best approach is the sensible, practical, and honest one.
Our solution will provide the technical security we all need, while the Serenity Shield team builds a potent commercial enterprise predicated upon it. Serenity Shield will be the premier digital succession technology solution in the digital asset space. All the while, the team will endeavor to communicate with our community, investors, and the wider market in the most sensible and professional way possible as we continue to provide reliable information and education for all.
Feel free to join our Channel Telegram https://t.me/serenityshield to be the first to know about official team announcements! Also, find us on Twitter https://twitter.com/SerenityShield_, or Discord https://discord.gg/serenityshield. We are always available on all of our platforms to assist with your questions. Please visit us at: https://serenityshield.io.
