{"name":"Beloved People: Do Kwon","created_by":"Bay Fragile x sgt_slaughtermelon","description":"Lots of new crypto artists seemed only peripherally aware of the collapse of Terra/Luna and what it meant for them. Terra was one of the first major dominos to start a series of crypto liquidity crunches (read: bank runs) in 2022. Somewhere around $60 billion was lost in a matter of days when a stable coin de-pegged and everything started shaking the collateral backing it was too intimately linked to it to hold value. Crypto enthusiasts probably recalled the similar failure on a smaller scale of Iron Finance. One of the worst aspects of the Terra collapse under Do Kwon’s “Lunatic” leadership was that Anchor protocol had been heavily pushed with “promotional rates” of almost 20% on their $UST stablecoin. Note that this was an algorithmic stablecoin — a sketchy departure from fully backed currencies pegged to the US dollar. Lots of average investors who were curious about crypto asked around about stable investments and were quickly pointed towards Anchor on Terra to hold their stablecoins. People wary of volatile tokens like Bitcoin and Ether (never mind meme coin insanity like Doge or Shiba) were given the impression that this was a relatively safe investment. More like a savings account for money that you didn’t want to invest in any market, but were content to earn outsized APY on as an early-adopter bonus with the expectation that it would taper off once the total value on Anchor had made them a success. \n\nThis really may not matter to a lot of artists who are new and didn’t and still don’t have a lot of crypto they want to save and are just trying to pay some bills in the real world. What does matter is that $40 billion evaporating (one way or another) means that lots of NFT art collectors had their savings go up in smoke. They may have thought this was a relatively safe place, but this was the safety net money, not their play money for investing in art: now they need to be more conservative with their investment funds until they regain some of their massive losses. Not only did that collapse probably affect lots of collectors, but it was one more domino in the bad optics campaign being run by our beloved industry. Anchor was promoted all over the place (it was hard to go far in subreddits about crypto without seeing people mention it as a good place to hold stable coins) and touted as a safe entry point to cryptocurrency for outsiders. If you follow Coinfessions on Twitter, some of the content is definitely made up for entertainment, but some of the stories coming out around the Luna collapse sounded real enough and downright tragic. Investors burnt by LUNA and Anchor are probably not going to double-down and explore elite asset management like art collecting.\n\nIt’s also worth mentioning that the collapse of LUNA has cast a shadow over the entire Cosmos multi-blockchain network. Artists intimidated by expensive fees on Ethereum experimenting on other chains may find that the confidence in Cosmos’ narrative of a multi-chain future has been seriously shaken. Not just in the sense of bridges from one chain to another being hacked - but in the same way that a very tall post in a large tent getting put through a woodchipper may not collapse the tent, but it certainly deflates it a little and makes everything feel shakier.\n\nThe silver-lining, if there is one, is that algorithmic (and native-token backed) stablecoins may become unwelcome in crypto. The apparent stability of DAI and USDC in contrast means that in the eventuality of a future where buying and selling art with volatile currencies seems silly and difficult, we may have meaningful alternatives as artists. What it means in the meantime, however, is that the collapse that happened while Do Kwon was tweeting taunts to his detractors and making empty promises to his following made all of crypto start to decline in 2022 because confidence in the entire crypto ecosystem was weakened. That much money crumbling meant that other foundations that were built on it, quietly, began to also give way. It was called “contagion” for a reason, and a part of Do Kwon’s cockiness was based on his belief that Luna was too big to fail - that they were too interlaced with other funds and protocols to fail without dragging everyone else down and so the users would defend the UST peg with him. Ultimately, they did not, and since the collapse of Luna we have seen a long unwinding process where other funds admitted they were spread too thin as well. \n\nFor artists: if you were watching the collapse of Luna as it was happening, your expectations of what kind of NFT market there would be in the coming months was probably dampened. Art is not independent from the larger market conditions, even if it defies them sometimes. Big tectonic shifts affect you too, whether or not the horizon shifts for you with every ripple of catastrophe. 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