Terra’s fall may have silenced some trash talkers, but Do Kwon insists that he will rebuild.
Do Kwon’s memes, and classist slurs Terra CEO Do Kwon have hurled at Twitter critics. They now ring hollow in the face severe liquidations, and a USD-based stablecoin that is 95 cents lower than its peg.
Some people saw it coming. Cyrus Younessi was an analyst at Scalar Capital’s crypto investment firm. He saw UST’s white paper in 2018 and immediately warned. Younessi stated that the algorithm linking Kwon’s stablecoin with the greenback could fail one day and lead to a “death spiral” in Terra’s capital system.
Younessi was not the only one to be concerned. There was a small group of industry professionals who warned about Terra’s instability and danger. These included Charles Cascarilla CEO of stablecoin issuer Paxos which publishes monthly attestations that Paxos’ Paxos Dollar is backed 1:1 by fiat reserves and other debt instruments and Kevin Zhou co-founder of Galois Capital crypto trading fund Galois Capital.
Kwon, 30 years old, dismissed their concerns with more trash talk.
Now, Kwon must admit that Younessi and Cascarilla were right all along. He was the last nail in UST’s coffin.
Hubris is often referred to as excessive pride. However, Aristotle said that it was not. “Hubris is when you do and say things that make the victim feel shameful… just for the enjoyment of it.” Hubris is a belief that oneself is better than others.
Aristotle may have died two millennia ago, but his words portray a vivid portrait of Kwon. He was the CEO who believed he was too smart to fail and who publicly threatened his competitors. Kwon also admitted that he enjoyed watching others fail.
His failure has taught the industry more than just a lesson about not how to create an algorithmic stabilizecoin. It’s also a stark reminder of the personality cult that allows people like Donald Trump or El Salvador President Nayib Bukele to silence critics using the force of their ego and not the soundness in their arguments.
Kwon’s promise was as good as MAGA’s: He would make Terra “the largest crypto-decentralized money period.” So long as he gave his LUNAtics reasons for believing in him (aka profits), he didn’t have to answer to anyone.
Then came May 9, 20,22 when UST dropped 20 cents from its peg.
Kwon’s LinkedIn profile and his Twitter account were all that we knew about him before Terra’s collapse. After studying computer science at Stanford, he graduated in 2015. He briefly worked for Microsoft before forming Terra.
CoinDesk allegedly didxxed Kwon in the role of “Rick”, two days after UST’s plunge began. This is a reference to half the cartoon duo from “Rick and Morty”, and also to Basis Cash (BAC), an algorithmic stablecoin project that failed and lost its dollar peg early last year. BAC now has a value of just a fraction.
Still, Kwon appears steadfast. He finally took the heat after two days of silence on Twitter last week. He appears to be ready to rebuild Terra. He proposed Monday to fork LUNA’s blockchain and rename Terra Classic the current chain, wiping out UST.
Kwon’s proposal was rejected by Terra’s community forum with a near unanimous vote. Many prefer Kwon to listen to Changpeng Zhao ‘s suggestion for buying and burning most of LUNA’s hyperinflated circulating supply of 6.5 trillion tokens. Kwon is aware of what the community wants but he’s fighting against it. Instead of dismissing his critics outright, he is engaging in constructive conversations and criticisms.
He is also very hot on him. An array of allegations have been levelled at him by angry investors, restless Twitter users and others, including claims of fraud and insider trading. Although local sources suggested that he might have evaded taxes this weekend, he seemed to dismiss them, stating that he is fully settled with Korea’s government.
In the coming weeks, months, or even years, crypto communities will have to sort fact from fiction. But Kwon won’t be going anywhere. This means that Terra, solvent or not is still on everyone’s radar. Kwon’s charmed hubris and digital fools gold may have been a luring vision for his admirers, but the tap has run dry and the room is now quiet. At least, for now.