The collapse of FTX contains lessons for all of crypto, according to ethereum co-founder Vitalik Buterin.
Buterin emphasised the stability of crypto’s so-called underlying technology, the blockchain, while acknowledging the heavy impact of the meltdown of the Sam Bankman-Fried crypto empire.
In the days since FTX filed for bankruptcy, entities ranging from BlockFi to Genesis to Gemini have been hit by the fallout.
Despite the upheaval, Buterin said blockchain base layers and decentralised-finance protocols worked “flawlessly”.
“What happened at FTX was of course a huge tragedy,” Buterin said. “That said, many in the ethereum community also see the situation as a validation of things they believed in all along: centralised anything is by default suspect,” he said. These beliefs also included putting one’s trust in “open and transparent code above individual humans”, he added.
Read: Crypto exchanges struggle to convince customers they’re safe
Buterin, like many others in crypto Twitter, has in recent days weighed in on how crypto exchanges could help shore up confidence in their businesses. The downfall of Bankman-Fried has led to an industry-wide self-reckoning over transparency and risk.
Commenting on the earlier collapse of Do Kwon’s terraUSD algorithmic stablecoin and associated luna token, Buterin said “crashes like that are on the one hand necessary for the ecosystem”. On the other hand, he added, “I really wish that it happened when terra/luna was like 10 times smaller”. — (c) 2022 Bloomberg LP