Silence from Do Kwon says it all amid UST crisis

Do Kwon is the founder of Terra and the face of the ecosystem. He is also extremely active on Twitter, frequently discussing Luna, UST and the merits of the algorithmic peg.

Tone

Well, I say discussing, but it’s normally far from a discussion. He often takes a very aggressive line with accounts enquiring about the sustainability of the peg, the long-term viability of Anchor and many other (valid) questions about the experiment that is UST.

6/ On depeg risk – I've grown quite tired of arguing with idiots on Twitter on whether UST can remain stable in bear.

So soon I will propose creating multi billion dollar reserves in decentralized assets (BTC and others) in an attempt to save myself time. More to follow.

— Do Kwon 🌕 (@stablekwon) November 20, 2021

Yesterday, his UST stablecoin de-pegged to 60 cents. As I write this, it’s back to around 90 cents, but the fear that the confidence in the system is irreparably damaged remains. And one of the biggest reasons I would be concerned about the ability of UST to recover in the long-term is the attitude of Do Kwon, as well as his silence during this whole debacle.

Shortly before things got really ugly, he posted the below, in his typical, casual tone.

Im honestly getting pretty tired of “unlocks were a surprise” bs, if you can’t bother to look up fundraising history or understand i give upside in luna to terra staff im sorry you’re ngmi

— Do Kwon 🌕 (@stablekwon) April 27, 2021

Then, nothing. Radio silence. His excuse when he finally resurfaced today, nearly 24 hours later? “Didn’t mean to be so quiet – needed razor focus to deliver, thanks everyone for the support”. Hmmm. 

I have been arguing for a while that Do Kwon does not show the temperament, transparency or maturity to lead an ecosystem that is worth billions and billions of dollars (Luna was worth over $40 billion and UST $18 billion before it all imploded). 

Deploying more capital – steady lads

— Do Kwon 🌕 (@stablekwon) May 9, 2022

Centralisation

But maybe whether he is suitable or not isn’t the point. This is advertised as a decentralised stablecoin, which is the very reason that it utilises the algorithmic peg. So why do we need to rely upon the word of one individual? Why do we need to await the Luna Foundation Guard (LFG) to deploy their Bitcoin reserves in an extremely discretionary and opaque way? Is that the very definition of centralisation?

Riddle me this – what is the difference between LFG’s deployment of their Bitcoin reserves and the Fed’s open market operations with the US dollar?

This has the potential to be one of the biggest disappearing acts of wealth in history, if Do Kwon and the LFG cannot convince the market that the peg can be trusted again going forward. After such a public run on the bank, it will be an incredible comeback if he can manage it, and I certainly will tip my hat to him. 

I just fear the silence from him during yesterday’s meltdown says measures about the extent of the damage, and how deep this crisis really is. When discussing a run on the bank, once the confidence is gone, the game is up. So whether that confidence can be restored or not is worth everything here. 

With that in mind, Do Kwon’s next tweet could be the most important in Terra’s history.