Build Back Better? Terra, Luna, and the Case for Consumer Protection Mindset in Product Design


US$30B in blockchain-based stablecoins just imploded, which implies regulations are coming for the sector. Remember our recent article on the first lawsuit against a DAO? Yeah, we can expect more lawsuits coming in this space. If the creators of blockchain-based products don’t think of solutions for users’/investors’ protection, someone else will spearhead and make the rest of the competitors look like they were from 2016. It is pivotal to understand why and how you could win more people to be sticky with your product through integrating consumer protection in your product design.

Why implement consumer protection in product design?

In 2019, one of our co-founders, Geoffrey, moved from product/protocol in the blockchain space to regulation and compliance. Geoffrey launched a web2 Digital Identity product Trusting Social and joined the World Economic Forum’s Digital Currency Governance Consortium conceived by Sheila Warren and led by Mark Carney and Tharman Shanmugaratnam and co-authored the section on consumer protections with Ashlin Perumall, Yan Xiao and others. You can read the report here.

Coming from the tech-side, Geoffrey’s ex-colleagues considered it silly then in an industry that frowns on regulators as “normies”. Build the future! Be decentralised! Normies don’t get it! But regulations are born from crisis and even when they are overbearing and counter-productive, or ill-suited to changing technologies, we must understand it first to disrupt or engage it. The #terraluna implosion reminds us that the aim of blockchain is to build a better system — be it governance, finance, organisations or gaming. We cannot do this if we forget why regulations exist. We will make mistakes, but we must do our best to minimise those mistakes.

Coming from a product background, we believe that web3 products must be designed with consumer protections at the core of the product design process specifically because we are self-regulating! This will slow the pace of product development and new launches. Legal product managers and governance advisors will be needed. It will cost more. But it is incumbent on web3 entrepreneurs to understand that because there are a limited number of rules and we need to hold ourselves to higher standards. Self-regulation requires individual responsibility.

Recommendations for designing self-regulated products

While writing the World Economic Forum report, we kept having to decide how we could still encourage innovation while protecting consumers. Reading the reports of people who lost everything with the the collapse of #terraluna should humble us that our creations have consequences.

Some practical tips we have for designers/builders of self-regulated products are to:

  1. Draw parallels. Find out what the closest IRL version of our web3 product is. We know you (product builders) hate to admit this, but what you build is not “different this time;


We’ve now learnt that stablecoins are not so stable and there are so many fluctuations going on in the blockchain world at the moment and for the next few months. To draw users’ and investors’ appeal back to the decentralised products, creators need to put themselves to higher standards and bring about protections for their users. We’ll keep you posted with further news on the market and other helpful articles for DAO creators via our channel.



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