Vitalik Buterin, the face of the largest smart contract platform, Ethereum (ETH) blockchain has commented on the implosion of the Terra ecosystem which occurred earlier this year (May), resulting in the descent of popular Terra-related tokens including the algorithmic-based stablecoin TerraUSD (UST) and LUNA (now referred to as LUNC).
The Ethereum co-founder said in an interview that this unfortunate incident that wiped out more than $40 billion from the cryptocurrency market capitalization has made a lasting negative impact on the concept of decentralization widely adopted in the crypto industry.
He said that the Terra collapse has in a way reduced the trust some users have in projects. Going by what Buterin said, decentralization was trusted wholly until its concept failed in the hands of Do Kwon's TerraForm Labs.
Speaking on the topic of decentralization, Vitalik Buterin said
The times when it (decentralization) hasn’t improved things, probably the biggest one was the Terra Luna collapse of a few months ago, which was interesting because I think there was a combination of two causes. One of them was that the mechanism behind Terra Luna was just fundamentally bad economics.
In the interview with the New York Times anchored by Ezra Klein, Vitalik Buterin noted that regardless of the Terra ecosystem failure, decentralized projects like crypto exchanges are still safer than the centralized ones where governance and security are centered on one entity alone. Whereas with decentralized systems, governance is done collectively, involving all users.
The project founder added that the excitement to move towards the decentralized exchange model began when CEXes like Mount Gox and Bitfinex got hacked in the earliest days of crypto. In 2014 when Mt. Gox got hacked, about $400 million was looted whereas, in 2016, Bitfinex got hacked.
"So back in 2014, the Mount Gox collapse, where Mount Gox got hacked for about $400 million, at a time when $400 million was a huge chunk of the entire crypto market cap. That was a centralized exchange that got hacked and then two years later, Bitfinex got hacked, ” he said citing that centralized intermediaries are not needed to hold things on the crypto side.
ETH Underperforms Post-Merge
ETH, the leader of altcoins has been plunging post-merge as well as BTC and many other top cryptos. When asked about the prevailing underperformance of the Ether token (ETH) after such a major upgrade, Buterin noted that the case of buy-the-rumour, sell-the-news is what is playing out.
However, he believes that ETH will rebound soonest as the Merge upgrade has ushered in numerous improvements on the Ethereum blockchain.
In addition, Ethereum's Vitalik Buterin made a huge contribution to the blockchain industry via the writing and releasing of a crypto and blockchain-centered book. The book titled "Proof of Stake" dwells on the philosophy of blockchain and the making of the Ethereum (ETH) blockchain.
It is worth noting that the largest smart contract platform, Ethereum, which was launched in 2015 as a proof-of-work (PoW) blockchain by Vitalik Buterin, Charles Hoskinson, Gavin Woods, and other co-founders successful switched to the proof-of-stake (PoS) consensus algorithm mechanism.
Therefore, mining is no longer supported on Ethereum as the blockchain now takes up the staking approach to secure and run the platform. Whereas it is bad business for miners, proof-of-stake is less energy-intensive and ecologically friendly.
In consequence, ETH miners led by Chandler Guo, a top Chinese crypto miner planned a post-merge Ethereum fork which led to the introduction of a new token dubbed EthereumPOW (ETHPOW) into the market.
The post-merge Ethereum fork was a move taken to preserve PoW for Ethereum but Buterin stated beforehand that it will not gain substantial adoption, warning investors of the risks involved in investing in ETHPOW.
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