LUNA’s Ghost Haunts ‘Permissionless’ Crypto Conference

At the first industry conference since Terra’s $40 billion collapse, companies and investors say crypto could face a more uncertain future.

AccessTimeIconMay 24, 2022 at 7:56 p.m. UTC
Updated May 11, 2023 at 5:36 p.m. UTC
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WEST PALM BEACH, FLA. — One topic dominated the conversation at Blockworks’ Permissionless conference last week: Terra’s collapse.

After the death spiral of UST and LUNA wiped $40 billion from the books, many conference attendees were naturally preoccupied with where the contagion could spread, and who got rekt.

“I think the damage is pretty much done,” said Michael Tant, co-founder of the crypto venture capital firm Citizen X. “A lot of people got hit really hard but we don’t know the extent. There’s going to be a slow unwind of the impact over the next couple of months.“

CoinDesk spoke with a diverse group of conference attendees ranging from venture capitalists to project founders to crypto developers. Nearly all expressed worry about the Terra collapse and its various repercussions (market, regulatory, public opinion) for the industry.

“The yacht parties are going to be more subdued going forward,” said Vance Spencer, co-founder of the $1.5 billion crypto venture capital firm Framework Ventures.

“I spoke at my first conference in mid-2018 and recently went back to look at the list of speakers,” said Spencer. He said that “75% of those people are gone. You’re going to see a lot of people leave the space.”

But at Permissionless, the crypto crowds (and the yacht parties) were certainly still on display.

Terra rugged

As the conference approached, many ticket holders wondered what type of presence Terra, a lead sponsor, would have at Permissionless.

Throughout CoinDesk’s three-day attendance, Do Kwon and the Terra team were nowhere to be found.

“I’m not surprised,” one investor at the event told CoinDesk. “I doubt Do Kwon will ever set foot on U.S. soil again. Just look at what happened last time.”

Last September, at data firm Messari’s Mainnet conference in New York, Kwon was served by the U.S. Securities and Exchange Commission (SEC) with a subpoena before his onstage appearance.

A Wednesday panel on stablecoins that originally had Kwon as a headline speaker continued with MakerDAO lead developer Sam MacPherson replacing Kwon. MakerDAO is the platform behind DAI, the decentralized stablecoin that had been UST’s largest competitor.

“For a long time, there’s been debate between the two communities,” MakerDAO’s Luca Prosperi told CoinDesk. “Ultimately, the MakerDAO construct proved to be way more resilient, but it doesn’t give us pleasure because a lot of people lost a lot of money.”

In another instance, the opening day afterparty that was originally to be hosted by Terra was instead sponsored by Avalanche, another blockchain that partnered with Terra last month.

“The Terra people had all their swag shipped to the conference, they were supposed to be here with a booth,” one Permissionless sponsor told CoinDesk. “They came and picked it all up before the conference started because they didn’t want it to get meme’d on.”

What’s next?

CoinDesk spotted one attendee wearing a shirt emblazoned with the Terra logo. It was Terra developer Ivan Zundel, who said he had just flown from the Terra Hacker House in Chicago to attend the conference.

“There was a very solemn mood [at the hacker house],” Zundel told CoinDesk when asked about the vibe. “People didn’t feel that much motivation to build. Every day we were just looking at the price of LUNA dropping and UST de-pegging.”

“I’m not sure about the future of Terra,” continued Zundel. “But I think the ecosystem was good, the builders are good. The issue is, if nobody uses Terra, why would you build on it?”

CoinDesk also spoke with another algorithmic stablecoin project, USDN, the so-called Neutrino Dollar native to the Waves blockchain.

“USDN cannot death spiral the way UST/LUNA did,” said Coleman Maher, head of ecosystem at Waves Labs. “LUNA became hyperinflationary, while WAVES has a cap [on the minting].”

Maher told CoinDesk USDN is only backed by the token WAVES, and that he remained confident in the project. This year, WAVES surged over 300% to reach an all-time high of $62 this past March before falling to $5.46 as of Tuesday afternoon.

MakerDAO’s Prosperi says the stablecoin game is a patient one.

“From the outside, Maker has always been perceived as a slow-moving giant,” Prosperi told CoinDesk. “Innovation takes time, but we think for stablecoin providers, being prudent is very important. There is value in being very cautious in the way you innovate.”

Tightening the belt

For industry players, even those not directly impacted by LUNA’s collapse, the bearish market conditions seemed to have deflated crypto’s “easy money” environment.

“There used to be a really friendly environment with lots of $100-$200 million Series As,” said Framework’s Spencer. “I think that’s over. Now, if a project doesn’t have traction after their seed round, they’re not getting another check.”

Should prognostications of diminished venture capital interest ring true, founders could face a capital crunch in the ensuing months.

“Companies went into the new year with less than nine months of runway expecting to raise an up round to support their irresponsible burn rates,” said Bruno Faviero, co-founder of Magna, a token distribution platform. “Now they have to make tough decisions.”

A conference attendee from a project that was in the process of raising a round with venture capital firm Hashed told CoinDesk they were looking for a new firm to lead the round. CoinDesk previously reported that Hashed, a big investor in Terra, suffered $3.5 billion in losses from the debacle.

“I’m worried about some of the VCs that experienced huge losses that are now forced to sell down,” said Citizen X’s Tant. “Funds that got rekt will be looking to book profits or get liquidity from other projects in their portfolios.”

Other crypto players are more optimistic about a recovery, saying the current bear market will be less dreary than the “crypto winter” spanning late 2018 to early 2020.

“Institutions started to really shop crypto in the past 24 months,” said Felix Hartmann, founder of crypto investment firm Hartmann Capital. “The interesting thing is, they haven’t stopped. They’re not saying, ‘Whew, I dodged a bullet’ like they were in 2018.”

According to Hartmann, institutions are still interested in crypto despite the Terra fiasco. Additionally, the equities market doesn’t appear to be doing much better – another factor driving the institutional interest in crypto.

Quipped Hartmann: “If Target [TGT] dropped 25% a day, maybe crypto isn’t so bad.”

Crypto slowdown

Another important metric for the health of the industry is the inflow of developer talent – and there were at least anecdotal signs at Permissionless that this was also a variable affected by the market rout.

Previously, crypto broker Floating Point Group had a 100% acceptance rate of job offers over the last year, according to co-founder Kevin March.

However, since May 7, March said the firm has had several offer declines, with all of the declining candidates citing it was “not the right time to move into crypto,” according to the company’s post-interview feedback process.

“We had nearly a two-year perfect record,” March told CoinDesk. “We were founded in the 2018 crypto winter. We know this game – it’s time to build.”

Kevin Owocki, founder of the crypto grants organization Gitcoin, says that not all building in crypto is equal, and that the industry should be more focused on “positive-sum games.”

“It’s incumbent upon us to shift our attention and capital away from the latest decentralized casino and towards impact [decentralized autonomous organizations], projects that create positive externalities for the world,” Owocki told CoinDesk.


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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Tracy Wang

Tracy was the deputy managing editor at CoinDesk. She owns BTC, ETH, MINA, ENS and some NFTs.

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