Three things Terra’s Do Kwon must do from here
Make no mistake, Do Kwon is a genius.
The Stanford graduate will be the first to tell you about the successful companies he’s been involved with.
Among them, was the wireless mesh network Anyfi, which has been described as “one of the most sophisticated decentralised applications in real world use.”
He was also a software engineer at Microsoft and Apple, and was recognised in Forbes ‘Thirty under 30’ in the Finance and VC category.
Then, came the pivotal moment he created Terra.
It would become a story like the blockchain world had never seen before.
Founded in South Korea, it went from being a little-known payments project, to one of the world’s most used – and talked about – DeFi ecosystems.
That doesn’t happen without a mastermind at the helm.
But if Do Kwon deserves the credit for the success, he must also be held accountable for what’s happened during this disastrous week in May of 2022.
Terra’s Luna token has plummeted in price from an all-time high of around $116 last month, to around $4 at the time of publication.
Terra’s main product, the US dollar-pegged stablecoin UST, is no longer worth one dollar, instead plummeting as low as $0.30.
An unmitigated disaster.
Retail investors have reported losing their life savings.
The reputation of cryptocurrency is once again in tatters.
Do Kwon has taken to Twitter to say he is aware of the impact on LUNA investors.
“I understand the last 72 hours have been extremely tough on all of you,” he said.
“Know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this. Together.”
He then outlined a process he hopes will ensure that UST eventually returns to parity with the US dollar, but admitted “naturally, this is at a high cost to UST and LUNA holders.”
It will be a humbling experience for someone, who until this week, had almost been treated like a god of the cryptocurrency space.
Since bursting onto the scene, the young whizz-kid, has been described as over-confident by some and arrogant by others.
He’s been accused of refusing to listen to others and becoming overly-defensive when questioned.
He has only been bullish about his project’s success, even telling investors to use their LUNA as collateral to borrow UST, and buy more LUNA.
Anyone who followed that advice would have lost all of their investment.
Do Kwon has been offered advice by many people – including those he knew – but usually, he didn’t accept.
Would that advice had prevented the current UST disaster?
Almost certainly not.
But a more humble approach would perhaps have afforded him more support and sympathy in a time that he needs it.
I don’t personally know Do Kwon, but I have been watching the project’s progress since late 2020.
My first article about Terra was on April 5, 2021, and talked about the project managing to achieve adoption.
In October last year, with the help of Terra’s helpful Communications Manager, I reported exclusively that 160 UST-based projects were preparing to launch.
I have even covered a previous crypto flash-crash, during which the UST peg actually held strong.
For the future of blockchain, I wanted Terra to work, and perhaps it still will.
But the man at the helm, who earlier this year was so confident he was prepared to bet $200 million that LUNA would not drop below $10 in 2022, needs to cool his jets.
His developers, who perhaps spend too much time on Twitter and not enough time coding, need to focus on the job.
Do Kwon, if you’re reading, there are three things to do from here.
Reflect on the large number of your loyal followers who have just lost a lot of money, and unlike you, didn’t have a lot in the first place.
Learn how to be humble.
And most importantly.
Don’t give up.
Henry Chia is a journalist with Asia Markets. You can engage with him on Twitter.