The FTX Fiasco —The case for true decentralization
The events surrounding the liquidity crunch and subsequent downfall of FTX and Alameda Research were shocking to many both inside and outside the cryptocurrency industry. The sudden collapse of the third-largest centralized exchange has jolted the industry and caused significant pain for many entrepreneurs, investors, and traders throughout the space. If you were severely affected by these events, our heartfelt condolences go out to you. No one is happy with how these events transpired.
That said, this FTX fiasco is not a failure of cryptocurrency; it is not a failure of blockchain technology; and it is not a failure of Web3. It is a failure of the centralized legacy systems that have failed us innumerable times in the past. If you look back to the Mt. Gox hack and every hack or theft since, they have stemmed from the recurring issues of centralization, ownership, and ‘trusted’ third parties counter to the very base principles of cryptocurrency. These are the things that Satoshi Nakamoto set out to defeat when he developed Bitcoin in the wake of the 2008 global financial crisis. Alas, the bad actors from 2008 are mirror images of the bad actors from the FTX downfall today: trusted third parties who acted, and failed, in their own best interests and not in the interests of their clients.
There is a beacon of hope that the middlemen to financial transactions; governments, international agencies, banks, and centralized exchanges like FTX, can and will be cut out by technological adoption chiefly blockchain adoption. Two people who do not know or do not trust each other can already transact safely and securely on the blockchain without the need for any of these middlemen. That was Satoshi’s vision, and it remains our ultimate objective today. However, as evidenced by the number of people impacted by these events, the industry is not there yet.
Cherry Network’s Take
Cherry Network was built with the core principles of decentralization and transparency as the bedrock of everything being developed. The Cherry Network distributed storage solution allows users to trustlessly store their files in a peer-to-peer network while preserving content privacy and security. The network allows users to maintain true, censorship-resistant ownership of their digital assets enforced by distributed stake-based consensus.
The Cherry Network core team believes that a truly decentralized blockchain network must be managed through a decentralized autonomous organization (DAO) governance structure. A DAO places key decisions pertaining to the blockchain network such as upgrades, forks, rollbacks, and more in the hands of the token holders, thereby decentralizing decision-making processes and eliminating the risk that bad actors will hamper the security of your funds by acting in their own best interests.
The team at Cherry Network has repeatedly emphasized the use of transparency in their business operations. The team is not only always available to answer questions on their social channels, but we also hold weekly AMAs in order to keep the community up to date with everything happening regarding the project behind the scenes. Bull market or bear, the team faces tough questions week in and week out from its community of investors and users and answers them to provide complete visibility into the project’s operations.
What you can do to protect yourself
Fuelled by the events surrounding FTX and Alameda Research, the decentralized revolution is more important than ever. Many people have begun a mass exodus from centralized exchanges and CeDeFi platforms (centralized platforms that offer DeFi functions). While we fully support the move to full decentralization and trustlessness, there are still considerable hurdles to overcome before the mass adoption of decentralized applications and protocols may occur.
As blockchain developers work fervently to make their products easier to use and more accessible to the masses, centralized institutions such as FTX, Celsius, Voyager and the like will maintain a strong presence in the industry. However, blockchain users and investors can already take some positive steps to make their lives more decentralized and trustless. One key thing everyone can do today is taking self custody of their digital assets through a non-custodial wallet such as Metamask. Better yet, a cold storage non-custodial wallet such as Ledger is the safest option for storing your crypto. The longstanding quip, “not your keys, not your coins” holds today more than ever before.
If you do have to rely on centralized institutions for your crypto needs, be sure to make note of and avoid platforms with any potential red flags. Do your own research (DYOR) before making ANY decision with your digital assets. If you are researching crypto companies, some potential red flags you should watch out for include the following:
- Dodgy business practices — Platforms that only look out for themselves stand out like a sore thumb. Look for businesses that are hyper user-centric.
- Lack of transparency on operations and finances — Organizations should provide proof of reserves to ensure that user deposits are backed one-to-one by assets under management.
- Unsustainable economics — If something such as high staking APR seems too good to be true, it probably is.
- Incompetent team — Members are not professional, sensible, or responsible for their actions.
- History — History repeats itself. If a team or platform has repeatedly had problems in the past, they are likely to have more problems in the future.
Closing Thoughts
Decentralization and transparency are meant to mitigate the counterparty risks that we have seen materialize from the downfalls of FTX, Celsius, and the like. These events were not failures of the technology or crypto, but failures of trusted human counter-parties. Our job in the crypto space is to stay mission-driven in order to nurture, protect, and responsibly progress the entire space. Investors, project founders, and developers alike must hold projects to the highest standards of accountability and transparency and perform a high standard of due diligence themselves to protect their investments and their business interests.
Cherry Network and our projects under the Cherry Labs umbrella were not directly impacted by the downfall of FTX and the crash of its $FTT token insomuch that we held no position in their digital assets and never deposited any of our treasury there. Of course, we are feeling the pain in the markets just like everybody else, but our treasury is safe and secure, and we are well-funded to keep developing for years to come.
Crypto has survived many ‘winters’ and bad actors throughout its history, and it is our belief that the time is ripe for settling global crypto regulations. We hope that this disaster is a catalyst for a paradigm shift in the blockchain and crypto spaces — a cataclysmic shift towards true decentralization. It is then, and only then, that Satoshi Nakamoto’s dream of rooting out evil corporate greed will become a reality.
Get involved!
There are many ways to get involved with the Cherry Community, whether you’re a large or small investor, a developer, or a creator who wishes to join the Cherry Ecosystem.
We have just launched the Cherry Network Mainnet the first decentralized software connecting web3 to trustless file storage. Leverage the unique capabilities of the Cherry infrastructure, and build decentralized applications like never before. Potential partners who are interested in a trustless, business-ready interface to decentralized file systems can get in touch via our social channels or hello@cherry.network to learn more. Among the available opportunities is a spot in our Cherry Labs program, where we incubate innovative startups who build on the Cherry stack.
Join the Cherry Community
If the Cherry mission of providing truly trustless distributed file storage for decentralized applications speaks to you, then get in touch! Read our Cherry Lightpaper, and review our Technical Documentation to delve deeper into the Cherry stack.
We’ve brought together a community of technologists, artists, and creators, and we want you to get involved. If this speaks to you, we invite you to join our growing community.
Follow the official Cherry social media accounts, stay up-to-date with all our news and announcements, and subscribe to the Cherry newsletter.
To learn more about Cherry, visit Cherry.Network
