The crypto contagion caused by the infamous implosion of Terra this year only spread to companies and protocols with “bad balance sheet management” and not to the underlying blockchain technology.says Kraken Australia CEO Jonathon Miller.
Speaking to Cointelegraph, the head of the Australian crypto exchange argued that Sectors such as Ethereum-based decentralized finance (DeFi) revealed their fundamental strength this year by weathering severe market conditions:
“Part of the contagion that we saw in some of the lending models in the space, [ocurrió en] this type of traditional loan model finance that represents only a small percentage. But what we didn’t see is some sort of catastrophic failure of the underlying protocols. And I think that’s been recognized by a lot of people.”
“Platforms like Ethereum did not fail when volatility hit. Decentralized markets, decentralized lending models, DeFi in general, did not collapse. There was no contagion there. What was seen was a mismanagement of the balance sheets of the lenders with closed commercial rates,” he added..
Miller’s comment comes despite CoinGecko reporting a 74.6% decline in DeFi market cap during Q2 2022 following the collapse of Terra and a rise in DeFi exploits.. The cryptocurrency data aggregator also noted that the industry managed to retain most of its daily active users.
Miller also added that blockchain projects only ran into problems when the design of their underlying protocols was “obviously poor”, as was the case with the algorithmic stablecoin TerraUSD Classic (USTC).
“I think it’s about a counterparty. There is a Treasury management problem, not a blockchain problem”said.
Asked how Kraken has fared during this year’s cryptocurrency bear market, Miller suggested that the firm was well prepared to deal with volatility.. He noted that the company has survived many downturns in its 11-year history and, in particular, did not spend a lot of money on marketing during last year’s bull run.
“We are in a slightly different position than other exchanges that have spent a lot of money on advertising. We have a very strong business model, based on word of mouth,” he explained..
Miller was also optimistic about the current state of the Australian cryptocurrency sector.stating that there are many “underlying bullish signs from companies that are still creating products.”
He pointed to major banks, such as ANZ, which recently trialled the use of its own stablecoin on Ethereum, and major payment giants.such as Mastercard, which joined the Blockchain Association Australia, showed a strong “intention to get involved in the cryptocurrency and blockchain space”.
“So you know, institutions make use of the underlying technology, maybe a little bit off some of the speculative features, which is potentially a good thing.”
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