Community reflects on the lessons learned
On the anniversary of the Terra collapse, the cryptocurrency community reflected on the lessons learned from the event that wiped out the $40 billion ecosystem and caused Bitcoin (BTC) to drop from $28,000 to $19,000. While the incident was undoubtedly painful for those who lost money, it also served as a wake-up call for the industry to focus on liquidity, transparency and user protection.
Binance CEO Changpeng “CZ” Zhao shared Bitcoin’s price movement history in a tweet on May 11, recalling the Terra crash one year ago and stating several valuable lessons to be learned from the event. Following the crash, CZ emphasized, through his messaging, the importance of transparency and safeguarding users, including his “poor again” tweet.
To prevent governance attacks after the significant devaluation of the network’s Terra (LUNA) token, validators of the Terra blockchain swung into action on Thursday, May 12, to stop network activity.
Some community members expressed frustration that such a massive crash could occur in the first place, while others pointed out lessons they had learned from the incident, such as never trading emotionally and being strategic.
Obinna Uzoije, a certified data expert, discussed the necessity of doing due diligence on emerging projects before investing. Considering the cryptocurrency market is highly volatile, investing without proper research can result in significant losses.
The key lessons learned from the Terra LUNA crash include proper diligence. Doing due diligence on each project would save potential investors future heartache.
— Son of Timothy (@ObiUcheUzoije) May 11, 2023
Another member of the Terra community mentioned that a well-cut-out risk management system could help prevent losses in crypto by providing a framework for managing risk and ensuring that investment decisions are based on sound analysis and planning. This system could include setting stop-loss orders to automatically sell assets if prices fall below a certain level, diversifying investments across different cryptocurrencies and assets, and setting allocation limits for each asset.
It’s LUNA crash anniversary. Overexposure to such would be averted through a well-cut-out risk management structure”#Crypto #DeFi
— CFC (@Dr_CFC2) May 11, 2023
Despite the frustration, many in the community commended the step taken by Binance in the wake of the crash. Binance had let the Terra project team compensate affected retail users first, with Binance being compensated last, if at all. They saw it as a sign that responsible leadership could make a difference in the crypto world. Some even pointed to the incident as a catalyst for positive change in the industry, as it forced companies to reassess their risk management strategies and prioritize user protection.
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Overall, the community reaction to the anniversary of the Terra crash was mixed, with some still feeling the pain of their losses and others looking to the future with optimism. While the industry still faces significant challenges, it is clear that the lessons learned from the incident are still relevant today as the industry grapples with issues of liquidity, interoperability and user protection. The Terra collapse shocked the industry, and the community’s reflection offers insights into the importance of responsible leadership in the crypto world.
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