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I commented on how UST was collapsed and quoted: 

UST is a so-called algorithmic stablecoin, meaning that it’s not backed by assets like cash or cash-equivalents. Instead, it relies on trading and treasury management to maintain its value.

It is fake liquidity that will not work during the market correction.

Also, Cory Doctorow pointed out that it is similar to the 2008 housing crisis. 

I could not agree more simply that Terra just had its 1929-like crisis mode while the Defi industry is facing its 2008-like crisis now.

Using Bitcoin as the Treasury-backed management did not prevent the fall out of the Terra. 

The worst is "hard money" economy cannot prevent default when the market is falling intensely.

So the crypto is doomed to fail 😱?

Not yet 🌋! 

1️⃣ Token liquidity is not currency liquidity

The way token liquidity works only happens within its ecosystem. It is a management of the treasury to swap assets around to control its supply and demand. 

The price appreciation does not realize recognized through the token valuation but within the supply and demand operations.

Burning tokens did not diminish its valuation either because, again, it is a maneuver through token supply and demand.

Defi liquidity builds upon the fundamental assumption that the market is stable. However, when the market fluctuates and goes into a bear, everything is not working anymore. 

Devaluation of the tokens will be faster than the liquidity can provide, and it can not make up for the loss of liquidity and valuation of the token at the same time.

Such losses will not be able to pay off unless the market has been restored. But by that time, many investors might have sold their losses and moved on.

2️⃣ Dollar liquidity 

The valuation of the dollar is given by the government. 

The difference between the dollar system to Defi is that the government can force debts to be paid off.

3️⃣ Valuation of the cryptocurrency is a philosophical question

The valuation of the cryptocurrency is blurred between exchange value, use value, and opportunity cost.

The modern economist likes to refer to the utility value that how much one person wants and needs and to pay such a price to obtain those goods or services.

Therefore, the value of the crypto in the Defi only flows out, but there is not enough cash to flow in.

🤔 One assumption of CBDC

CBDC may resolve liquidity issues by providing real liquidity to Defi. It then will become a Cefi-Defi platform for institutions to provide Defi products. 

🤔 Bitcoin's Utility

The Bitcoin is still working as it is. The current dollar is appreciated, and the cryptocurrencies are subsequently depreciated. However, Bitcoin is acting like hard money, similar to gold then its currency theory. 

Other cryptocurrencies are acting as a currency in the payment system. 

Money is what settles claims to pay off debts, and debt is a promise to deliver money. 

Cryptocurrencies all act as a debt rather than credit (money).

Instead of debts waiting to payoff, cryptocurrencies wait for owners to possess the debt, which is willing to sacrifice the opportunity cost of moderate growth by taking huge risks of potential exponential growth. Only the problem is it will consume more patience than you can imagine.

Of course, these are my opinions, and we should see how crypto continues playing out under this market condition.

👋 Follow me here

Note: the post was shared on multiple platforms here.

You can refer my previous article lists here and here
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2022 Prediction
2022 Prediction #1: L1 Scalability
2022 Prediction #2: L2 Bridges
2022 Prediction #3: Zero-Knowledge Proofs or ZKPs
2022 Prediction #4: Regulated Defi On-Chain KYC
2022 Prediction #5: Institutional Crypto Adoption
2022 Prediction #6: Defi Insurance
2022 Prediction #7: NFTs-Based Communities - DAO 1.5
2022 Prediction #8: Metaverse and NFTs
2022 Prediction #9: Web2 Companies’ FOMO
2022 Prediction #10: Time for DAO 2.0
------------------------
DAO The Way
DAO The Way Part 1
DAO The Way Part 2
DAO The Way Part 3
DAO The Way Part 4
DAO The Way Part 5
DAO The Way Part 6
DAO The Way Part 7
DAO The Way Part 8
DAO The Way Part 9
DAO The Way Part 10
DAO The Way Part 11
DAO The Way Part 12
DAO The Way Part 13
------------------------
Learn How To Defi
Learn How To Defi Part 1
Learn How To Defi Part 2
Learn How To Defi Part 3
Learn How To Defi Part 4
Learn How To Defi Part 5
------------------------
Crypto Comics
Crypto Comics
Crypto Comics - PoW
Crypto Comics - Who is Satoshi
Crypto Comics - What is Token
Crypto Comics - What is DeFi
Crypto Comics - What is Wallet
Crypto Comics - What is HODL
Crypto Comics - What is Coinbase
Crypto Comics - What is PoS
Crypto Comics - What is DAO
Crypto Comics - What is A Block
Crypto Comics - What is NFT
Crypto Comics - What is Fork
Crypto Comics - What is Web3
Crypto Comics - What is DeFi-2
Crypto Comics - What is Yearn Finance
Crypto Comics - What is Degen
Crypto Comics - What is Aping
Crypto Comics - What is Cold Wallet
Crypto Comics - What is Hot Wallet
Crypto Comics - What is Airdrop
Crypto Comics - What is DYOR
Crypto Comics - What is 65537
Crypto Comics - What is RC4
Crypto Comics - What is WAGMI
Crypto Comics - What is Bagholder
Crypto Comics - What is Decentralization
Crypto Comics - What is Wallet Address
Crypto Comics - What is Plagiarism in Web3
Crypto Comics - What is Bart Pattern
Crypto Comics - What is Encryption
Crypto Comics - What is Consensus
Crypto Comics - What is Protocol
Crypto Comics - What is Stablecoin
Crypto Comics - What is ApeCoin
Crypto Comics - What is FOMO
Crypto Comics - What is Tokenomics
Crypto Comics - What is APR
Crypto Comics - What is to The Moon
------------------------
Learn Web3 in 100 Days
Learn Web3 in 100 Days - #1 What is the Internet and How Relevant to Web3
Learn Web3 in 100 Days - Day 2: What are the Browsers and Servers
Learn Web3 in 100 Days - Day 3: What are HTTP Status Code
Learn Web3 in 100 Days - Day 4: HTML and CSS and JS
Learn Web3 in 100 Days - Day 5: What is programming
Learn Web3 in 100 Days - Day 6: Markup, Elements, Tags, and Hyperlinks
Learn Web3 in 100 Days - Day 7: Style Your Web
Learn Web3 in 100 Days - Day 8: JS
Learn Web3 in 100 Days - Day 9: SQL
Learn Web3 in 100 Days - Day 10: Front-End
Learn Web3 in 100 Days - Day 11: Front-End Framework
Learn Web3 in 100 Days - Day 12: More HTML
------------------------
Modern Economic Nonsense
Modern Economic Nonsense - Inflation and Incentives
Modern Economical Nonsense - The Astrologist's Way
Modern Economical Nonsense - The VUCA World
Modern Economical Nonsense - Zug Tax and How to Run your Own Monopoly
Modern Economical Nonsense - Participatory Economy
Modern Economical Nonsense - Economic Models
Modern Economical Nonsense - Tokenomic Models
Modern Economical Nonsense - Design A Reputation-Based System
Modern Economical Nonsense — The Money Problem
------------------------
Yearn Finance Comic
Yearn Finance Comic - Part 1
Yearn Finance Comic - Part 2
Yearn Finance Comic - Part 3
Yearn Finance Comic - Part 4
Yearn Finance Comic — Part 5
Yearn Finance Comic - Part 6
------------------------
Curated Lists
Curated Lists - Web3 Culture
Curated Lists - Crypto-enabled Communities
Curated Lists - Crypto Philosophy
------------------------
Defi 101
Defi 101 - Part 1
Defi 101 — Part 2
------------------------
Thoughts
Thoughts about VC and PleasrDAO x BitDAO
The Crypto Market has Changed
The Myth of Inflation Hedge
The Myth of Stablecoin
The Myth of NFT
End of the Crypto Market?
The End of the Stablecoin?
Terra-UST Saga - How to repair the trust when there is no trust built on
How to deal with negative market sentiment

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Disclosure: The article was written by a delusional author who is possibly a nut job without any questions whatsoever about expertise in the subject matters. You should not believe any words this author wrote or you may experience similar symptoms or even possibly become a nut job.