This Is Not the Future I Am Fighting For
The following excerpt was taken from the June 2022 OpEd I had written for ChainSafe’s newsletter “Centralization Strikes Again”. If you find this content engaging, we would love your support on our Substack! ❤️
If you’ve read through every news bulletin from this month’s Timeline section of the Centralization Strikes Again newsletter, you will have undoubtedly seen a nefarious, recurring pattern. It honestly felt like every two to three news items, I was reporting on something to do with the collective meltdown of the crypto markets. This is due in no small part thanks to ponzinomic games, decentralization theatre, and CeDeFi. I enjoyed putting together this newsletter a lot more when the culprits for centralization were big [brother] tech companies like FAANG. Thanks to our friends in pretend-DeFi, this month became a slog to report on. This is everything I had hoped web3 would not fall prey to.
Obviously, a lot of the current issues we are seeing in the crypto markets can be attributed beginning with last month’s UST/Luna crash, which itself is deeply intertwined with the meltdowns from Three Arrows Capital (3AC), Celsius, BlockFi, Bancor, plus many more. Some were lucky to have escaped relatively unscathed (with exception to massive draw downs to their networth) — but many more weren’t so lucky. There were innumerous reports of users either finding their access to funds throttled by centralized decision makers, or completely left unable to access their savings. The damage from the fallout is still to be finalized in a calculation. It is sure to be immeasurable in many ways.
Teams that promised a “DeFi” product returned its users something far worse than what you would ever find in TradFi. Namely because here, not only were investors exposed to the outsized risk and greed of myopic protocol founders and megalomaniac margin traders, they were also left unprotected by regulation. This is the wild, wild west of crypto after all. Now think about what just happened there. Here I am, offering a case for regulation — as an absolute web3/crypto/self-regulation maxi.
This is not the future I am fighting for.
Rather than strive for the idealisms of financial self-sovereignty, a large part of the community succumbed to the pitfalls of forgoing self-custody. Instead, we fell in punch-drunk love with unsustainable yield via centralized lending platforms. Guess what they did with our funds? Use it like fractional reserves to play the same behind-closed-door games they play in TradFi — “You are not privy to that. You are not accredited enough to understand.” Rather than strive for openness and transparency, we looked on, asleep at the wheel, as OTC deals happened between large firms to serve more liquidity to “make it back in one trade”. Rather than uphold the values of immutability to some degree, any degree, we chose to sacrifice protocol so we can save our asses from liquidation.
Congratulations. We literally replicated TradFi. As ChainlinkGod said earlier this month, “Fate loves irony.”
So where do we go from here? How do we begin the process of healing? I don’t have great answers to that. For one, it seems to me that the masses must *necessarily* become educated on self-custody of their digital assets. If something sounds too good to be true, it probably is. Failing to understand this principle means we get back on the same merry-go-fuck-round the next time. Same product, different package.
Second, is perhaps we must teach the masses to see web3 technologies beyond the casino they perceive it to be. I subscribe to the idealisms of regenerative cryptoeconomics — the possibility for win-win-win options to exist. For this to happen, a very fundamental cultural shift in attitude and perception towards public goods must take place. But many are working towards this goal. The memes are only now starting to take root.
I still believe in web3. It will take some time for nature to heal, for sure. But we have the tools in place to launch human coordination into the stratosphere in the coming century. We just need to educate the masses, and perhaps help a few egomaniacs see themselves for what they really are.