Everyone - REKT

Individuals, protocols, CeFi, DeFi, VCs, hedge funds, all corners of the industry are reporting major losses, after being punished relentlessly by the unforgiving market conditions.

Over $2B in liquidations since last Monday, when $685M was liquidated in just one day.

And it’s not just those who were leveraged who are feeling the pain.

Anchor was a “safe” place. Celsius was a “safe” place.

When everything is going up, a sense of security is easy to find, but looking back, you see that you were simply ignoring the inevitable.

The top signals were especially blatant this time around:

$1.3M rock NFTs, $1.4M Loot NFTs (“someone else will build the game”), the boom and bust of yield farming, we’ve seen so much waste and so much greed over the past two years.

Yet despite this over-extended period of exuberance and gluttony, the latest market crash seemed to take even the most professional participants by surprise, as we hurtled with eyes wide open through various liquidation points, crashing helplessly from one crisis to another.

Aside from the clout farming contrarians who now have “mOrE tiMe tO BuiLD”, nobody is happy about the end of the bull market.

The bear is here, breaking assumptions you didn’t even know you had, and forcing uncomfortable decisions on all but a fortunate few.

Your idols are long gone, your favourite fund was forced to sell, and even the most sickeningly optimistic influencers are showing signs of capitulation.

The macro environment suggests we won’t be heading back up to the highs anytime soon, but we’re certainly closer to the bottom than the top.

All that froth and embarrassing publicity was simply a sign of mass adoption - something that we used to look forward to.

Now the limelight is once again focused on SBF, who remains as one of the few DeFi protagonists to not have been struck by total disaster. FTX has become even stronger during the market decline, as they’ve taken it upon themselves to bail out and gain influence over other centralised crypto organisations such as BlockFi ($15B AUM at peak) and Liquid Group.

Celsius ($20B AUM at peak) and Three Arrows (~$18B AUM at peak) are two other examples of what can go wrong when institutional credit is not transparent to retail investors. If all their business had been conducted on-chain, would we really have allowed it to go on for so long?

Meanwhile, decentralised protocols have done exactly what they were built to do.

Aave still lends, DAI is still stable, and LUNA made Do Kwon rich and famous.

The collapse of Celsius, LUNA, and Three Arrows Capital will bring harsh regulations upon the entire industry, and although those events make it hard to argue against said regulation, we can still hope that the hand of the law does not fall too heavily.

A return to utility, and a focus on fundamentals, are the only cure for the pain that we’re now suffering.

Bears can't live forever. Surely next time will be different...

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