How to Save Terra

This was a classic “bank run,” only with crypto.

The Problems That Generated This Mess

First, a quick recap on how we got here, with lessons learned.

  • Algorithmic stablecoins that are backed by “faith in the code” are inferior to those backed by “money in the bank.”
  • Blockchain technology still cannot handle the number of transactions during a panic (like a bank not being able to redeem money fast enough), so theoretical models should account for network congestion and sky-high gas fees.
  • Look for crypto ecosystems with plenty of use cases, and a rich ecosystem of apps. If you see a single app holding 75% of the total market, stay away.
Total money drained from the Anchor “bank” (courtesy DeFi Llama). Let’s call this “TVU,” or “Total Value Unlocked.”
  • Although they’re chasing eyeballs, crypto investing newsletters have a responsibility to their readers. When the building topples, it hurts everyone, because (as they’re so fond of saying) it’s all built with “money Legos.”
  • When you’re wrong, admit it. Only through this radical honesty about our own misjudgments can we build trust in this industry.
  • Don’t try to please the crypto faithful; rather, do what’s in their long-term interest.
  • The crypto community must get over its decentralization fetish. During times of crisis, decentralization cannot move quickly enough: that’s why we have a Central Bank. We need a balance.
I will steal … THE MOON! (Click to watch)

To Save the Earth, Blow Up the Moon

Here’s the TL;DR version of my proposal.

  • Relaunch TerraUSD as a fully-backed stablecoin.
  • Destroy all LUNA (blow up the moon).
  • Get rid of current management (clean house).
  • Rebuild Terra into something that’s useful.
LUNA: From $116 to less than a penny.
She’s watching.

Governments are Watching

There’s a final reason to set TerraUSD straight: lawmakers are watching this story closely. U.S. investors who got burned by Terra are going to complain to Congress, who will finally get off their pork butts and do something about crypto.



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