FTX’s collapse exposes one major challenge that needs solving in Web3. And it’s not what most people think.
The FTX saga was fuelled by a man’s vision to make money “by any means possible” and then use it to solve the world’s greatest challenges. In short, SBF was a self-proclaimed Robin Hood of the world whose sole objective was to make money off the rich to enrich himself and whoever he wanted to help. For him, most of this help was directed toward Joe Biden, to whom he had become a significant donor. And oh, also to his mother’s Mind the Gap - a rather clandestine network formed with the objective of funneling millions to Democrats.
Let me stop right there. My intention is not to get into the politics of it all. What I’m merely pointing to are facts. I said at the start of the previous paragraph that that was the man’s vision. There’s conjecture on whether FTX was part of that plan or if the lobbying was all intended to save his ass in the future. Or whether he knew what Binance would do. Or whether he knew the impact that all of this would have on the market.
What’s of critical importance is that, as users, we gave in to the vision of a man who pretended to be someone he was not. You’d say well, that’s what a conman is. And you’ll be right. It is the job of a conman to deceive you. But most of us can’t see through the deception immediately. And because of our inability to do so, a decentralized ecosystem was needed where it wasn’t one man’s far-fetched vision and his guile tactics that would dictate the fate of millions of users
But here we are.
To say that someone could have predicted the fall of the entire exchange and the dominoes it has led to crashing is bs. But to look for lessons that can be learned from the whole debacle and focus on resolving the challenges that it brings to light is a wise way forward.
One of those challenges is building decentralized applications that give the users the desired experience. There’s a reason why users put their entire life savings on FTX when there are enough resources available that they should preserve it on cold storage. FTX toppled Coinbase in trading volumes when there are other decentralized alternatives available. There’s a reason why GMX wasn’t used as the preferred perpetual trading platform over FTX. We attracted users to Web3 in 2021 on the “go from 1x to 100x in just one cycle” promise. But that wasn’t enough to make them stick.
We attracted them with the promise of building an alternative financial ecosystem that would not be subject to changes based on a single man’s - alleged - promiscuous leanings but on code that is immutable and can only be changed with the confluence of people who care about the product. While this works to make maximalists stick around, not users.
We still needed to make the average user stick. Centralized alternatives still managed to remain superior. Not just because of the SuperBowl ads. But because we hadn’t given them a strong enough reason to move their assets from exchange to cold storage. Or to move to decentralized alternatives for trading.
We can’t blame the users for everything. And neither can we blame one man. In fact, the problem was never of an individual’s want for power driving him on a path to embezzle and indulge in fraud. The problem was a dearth of systems that would make the users stick to secure, transparent, and decentralized options. When the whole FTX empire started to crumble, users who were still interested in trading moved quickly to the decentralized options.
The same is true for GMX protocol.
This shows that some of them were also aware of these alternatives but it was hard for us to move them from what they were using. And that is one of the biggest challenges we need to solve. The promise of the decentralized ecosystem shouldn’t just be to offer pump-and-dump promises but to provide easy-to-use products that add significant value to users. The saying build a great product, and they’ll come is incomplete: build a great product, market it well, highlight its strengths, and they will come.
These learnings are leverage for us. The bear market and the rather macabre sentiment for crypto is a blessing in disguise. We must now put all hands on deck and use all we have to Build Back Better. The ecosystem needs us, enthusiasts, to emerge like Phoenixes. This is our time to shine. LFG!