Will Ethereum Break Like Terra Luna?

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In this video, I discuss the fragility of protocols that run on proof of stake, like Ethereum.

The lower Ethereum’s price falls, the more people will choose to unstake their coins, which further erodes Ethereum’s security and could lead to a death spiral.

By contrast, capital deployed into the Bitcoin mining ecosystem remains there and cannot be withdrawn in the same way. Bitcoin mining machines (ASICs) can stick around for 6 years, and profit margins for ASIC manufacturers get reinvested into producing more powerful and efficient new ASICs thanks to human ingenuity and Moore’s Law.

Because these ASICs have only one use (mining Bitcoin), the capital cannot flee the Bitcoin mining ecosystem as easily or as quickly as staked deposits can flee the Ethereum staking ecosystem (once withdrawals are allowed by Ethereum devs).

Regulators need to look into whether proof of stake protocols like Ethereum and Cardano are at risk of catastrophic implosions like Terra Luna.

Institutional investors need to be able to explain to their LPs how and why their investment in ETH won’t end as badly as Terra Luna. Do you feel lucky, punks?

Not investment advice! Consult a financial advisor.

Behind Terra’s $60 Billion Implosion:
https://www.bloomberg.com/news/newsletters/2022-05-16/the-big-take-what-caused-terra-luna-s-60-billion-implosion

How much ETH is being staked:
https://www.stakingrewards.com/

Ethereum Devs Plan to Enable Staked ETH Withdrawals by March 2023:
https://decrypt.co/116763/ethereum-devs-staked-eth-withdrawals-shanghai-march-2023

Bitcoin network hash rate:
https://www.blockchain.com/explorer/charts/hash-rate

Exxon Mobil Powering Bitcoin Mining Pilot Using Excess Natural Gas:
https://blockworks.co/news/exxon-mobil-powering-bitcoin-mining-pilot-using-excess-natural-gas-report

I am not being paid or otherwise compensated by any company or cryptocurrency project that I mention in my videos.

My opinion is not for sale. Please do not contact me with any affiliate or advertising deals.

#ethereum
#terraluna
#bitcoin

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