Gone are the Old Gods // Behold, a New Temple
My thoughts on the state of crypto.
A Forest; Burning
The past week has been nothing short of a massacre for markets across the globe, and crypto was not spared in any way, shape, or form. Our collective forest has been set afire. As loss of unprecedented scale ripped apart protocol after protocol, an ominous warning from the crypto exchange juggernaut Coinbase regarding bankruptcy snuck back into my head. The warning, which was tucked quietly into an SEC Form 10-Q in May, disclosed a frightening question/possibility: what if Coinbase were to go bankrupt?
“[O]ver $250 billion in custodial fiat currencies and cryptocurrencies that it holds on behalf of its customers could potentially be included in the bankruptcy estate, and its customers could be treated as general unsecured creditors.”
To put that in perspective, consider the fact that the GDP of Peru is only $231 billion. Despite knowing this, I let it go and others did as well. Coinbase was simply too big to fail in my mind.
Then the markets started to get worse…slowly at first, then all at once. Red candle after red candle. Liquidation after liquidation. With each passing day the timeline of crypto twitter grew darker, quieter, more foreboding. The reality that the bull run of the last two years may really be coming to an end began to set in, and as the monumental collapses of Terra, Celsius, and now 3AC manifested themselves before us, it felt as if the world were watching as a city burned down, unable or unwilling to to help. I’m reminded of one of my favorite exchanges from The Sun Also Rises:
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually, then suddenly.”
I’d heard it said many times before that the backside of a trade is 3 times as fast as the ride up. I didn’t understand it then, but I understand it now. Still…we were unprepared for the violence of the descent. And just yesterday, it felt as though what was left of us was divided and scattered among the ruins; fractionalized; fragmented; forgotten.
If the lending protocols could fall, surely Coinbase could as well…the prospect was unsettling. What would happen to the space if the only Crypto Company with a semi-legitimate claim to household recognition were to become insolvent? The prospect was grim, the fear of it was tangible. The quarterly reports that accompanied that subtle warning didn’t help to subdue the fear either.
“The disclosure is likely alarming to many Coinbase customers, especially at a time when the company’s financial results are in decline due to what the SEC filing described as “softer market conditions” and Coinbase’s commitment to invest heavily this year. In the same report, Coinbase announced a net loss of almost $430 million for the quarter.”
Coinbase CEO Brian Armstrong has repeatedly assured investors they have nothing to fear, and that bankruptcy is not imminent nor even a relatively close object in the distance. He maintains that consumers can trust that their investments are safe with Coinbase. If that’s the case, then why has Coinbase been slashing jobs? It seemed as if the world was falling around us.
I laid down to sleep.
A Forest; Growing
To listen & to see:
The smoke from the shelling was heavy on the lids of my eyes; my ears ringing loud from the sound of footsteps departing, familiar voices fading. Scams. Ponzis. Pyramids. Hoaxes. I could feel the joy of the anti-crypto as they shouted these words, wielding them as weapons, casting them manically, heartlessly, aimlessly. Could we really have been so thoroughly beaten?
“No.”, I thought.
The sun sought out my eyes then, and warmed them, still closed.
We would not be defeated so easily — I heard voices in the distance.
I opened my eyes and looked for flowers in the concrete, and to my surprise I found many. I listened for the words of the calm and collected and I found many more. As people deleted their empty wallets and left the space, I found those who stayed had more room to breathe, more time to speak, more space to see. I remembered the high of watching the web3 community build what is perhaps the most beautiful experiment in decentralized collectivism in human history. The ones who built before? They remained. They may have bent from the weight of the storm, but they did not break. Their roots had commingled and grown strong with the earth beneath the concrete.
We can rebuild the temple, free now from the idolatry who caused it’s fall. We can turn the good earth over to those willing to grow with it, not against it. The guise of the 3 lending protocols who had catalyzed the destruction was now revealed. Trad-fi larping as de-fi. Polluted at the source. This was not a fire at all; this was a baptism. A cleansing.
Those of us that remain are strong:
“A new Bank of America survey shows that 91% of more than 1,000 current and prospective U.S. crypto investors plan to buy more digital assets in the next six months.”
Those of us that remain will light the way for those yet to come. Already the smoke is clearing.
As I looked upon the woods burnt and smoldering still, I knew gradually, and then suddenly; this forest is not dead.
So to those of you who remain;
she is only practicing humility, and patience;
she has not yet departed;
and there are saplings stirring in the soil.