The co-founder of Ethereum (ETH) says the implosion of stablecoin issuer Terra (LUNA) earlier this year dealt a heavy blow to crypto decentralization.
In an interview with The New York Times, Vitalik Buterin says the decentralization of the crypto space has gone in the right direction since the epic collapse of digital asset exchange Mt. Gox in 2014.
According to Buterin, hacks involving centralized intermediaries encouraged people to move to a decentralized model when buying and selling cryptocurrencies, and things were going well until Terra’s meltdown in May. he points out.
“So we don’t need a centralized intermediary to hold things on the crypto side. And I think that’s actually improved things. I think the Luna collapse was the biggest, which was interesting because I think it’s a combination of two causes, one of which is that the mechanics behind Terra LUNA are fundamentally bad economics. It means it was.”
Ethereum’s creators say Terra’s blockchain is decentralized, but the team behind it had too much control behind the scenes. Buterin points to Terra’s efforts to accumulate Bitcoin to support the algorithmic stablecoin UST.
“And no one knows what the LUNA Terra team was doing with Bitcoin or its assets. And they made a lot of promises. And we were trying really hard to do this kind of very centralized effort, and it ended up failing, right? Because it shows, to some extent, that the problem of
Regardless of what the Terra team has done behind the scenes, Buterin stresses that the transparent nature of blockchain has allowed some to predict the end of crypto assets.
“Because if the algorithm is bad, even a completely open and transparent implementation of a malicious algorithm will break. It shows the difference between decentralized and untrusted parts of the ecosystem, and many were able to warn about what could happen.”
You can read the full interview here.
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