This Is Why Terra Luna Crashed
Unsustainable economics. It was nice while it lasted though.
Back in December, I wrote a story about a blockchain called Terra and why I thought it was the most promising blockchain around. In that story, I included a section on how Terra could fall apart in a theoretical black swan market event, and it seems my worst fears have come true.
At the beginning of February, I wrote another story about why crypto winter was around the corner, though I didn’t know exactly when it was going to happen. My fundamental concern at the time was that crypto was lacking a consumer economy and therefor its whole valuation was way over-blown. Unlike the stock market which is primarily dominated by core human needs like food, housing, utilities, natural resources, etc., crypto seemed like it was trying to build a financial services economy without a consumer economy to base it on top of.
With Terra specifically though, there were some fundamental concerns.
For the uninitiated, TFL = Terraform Labs, the creators of the Terra blockchain who are still very actively involved with its day-to-day operations. And Do Kwon is one of the co-founders of TFL and by far the most well-known (he fashions himself for crypto what Elon is for the business world in this writer’s opinion).
