Satoshi Nakamoto left a large pair of shoes to be filled after releasing the code for Bitcoin (BTC) into the world, helps create a network, and then disappears without a trace.
Over the years, the crypto ecosystem has seen many developers and protocol creators promoted to be crypto messiahs for loyal holders who finally have the best plans to be disastrous when the protocol is hacked, abused or abandoned by strange developers.
2022 is barely halfway done and this year has seen a lot of bad intentions, which collectively helped explode the market into bear market territory. So take a closer look at each of these events to help explain how similar outcomes can be avoided in the future.
Some developers are anonymous for a reason
Satoshi may have managed to remain anonymous when launching Bitcoin, but in many cases since then, having anonymous developers has been a red flag.
Many anonymous developers cite personal safety reasons for taking this route. While this is a valid reason in some cases, sometimes anon developers hide from previous mistakes or pre-plan to cover the track in case of future violations.
An important example is the Squid Game (SQUID), a Netflix -inspired memecoin that accumulated 45,000% within a few days of its launch, only merchants know that it cannot sell tokens in any exchange.
Investors eventually discovered that all anonymous developers and all social media channels were blocked from commenting.
The crypto community has grown to be somewhat distrustful of anonymous developers and this can be seen in the negative reaction to the revelation that founder Azuki token nonfungible (NFT) projects involved with three other NFT projects that were eventually abandoned, leaving the owners with little to show except jpegs worth.
Another example of a naughty anonymous developer occurred in 2022 when it was revealed that anonymous Wonderland (TIME) treasury manager @0xSifu became alleged financial crimealong with QuadrigaCX founder Michael Patryn.
1 / Today’s allegations about our team members @0xSifu will circulate. I want everyone to know that I know about this and decide that an individual’s past does not determine the future. I choose to respect the time we spend together without knowing the past more than anything.
– Daniele never asked DM (@danielesesta) January 27, 2022
The revelation of this connection led to the collapse of several popular projects including Wonderland and Popsicle Finance, while a significant amount of criticism was directed at Abracadabra.Money creator Daniele Sestagalli.
Prior to the revelation of @0xSifu, all three protocols appeared to be increasingly adopted, but each protocol was only a reflection of their previous success.
Having an anonymous developer removes accountability from the equation and is increasingly becoming a red flag when handling multi-million dollar cryptocurrency protocols.
Beware of cult personalities
Finance is no stranger to cult personalities and crypto is not immune to this phenomenon.
A longtime crypto expert will remember Roger Ver calling it “Bitcoin Jesus” and charging a fee to create Bitcoin Core and make Bitcoin Cash (BCH). Millionaire Dan Larimer is also on his mind, and investors will remember EOS (EOS) that helped him raise $ 4 billion in initial coin offering (ICO) boom from 2017 to 2018. In each example, it was the overwhelming number of followers that propelled each project forward.
Neither the BCH nor the EOS could recover their highest in the 2021 bull market despite all the hype about the future when it first launched. This may be because part of the hype is centered around the personality at the end of the project.
More recent examples include the collapse of the Phantom ecosystem token price after decentralized finance (DeFi) developer Andre Cronje shut down his Twitter account and told the public that he was leaving the entire crypto space.
Cronje has become so popular that many people buy tokens just because they participate, and when they go away, many of these investors throw away ownership, which affects the price of the tokens.
Previously, the brand / marketing of Phantom was Andre Cronje.
Now we don’t have that identity.
It’s not a suggestion to focus on branding / marketing now, it’s an absolute necessity.
– Jack The Oiler (@Jacktheoiler) May 7, 2022
While Cronje did what he considered right and had no ill intentions towards the community, his actions appeared to have a negative impact on the crypto market due to his popularity in the community and the dedication of his followers.
The important thing is to be vigilant when a developer seems incapable of doing wrong and remember that cult -like followers can have results that go beyond the community.
Decentralization requires community involvement
Another red flag to look for ar decentralized autonomous organization (DAOs) and DeFi protocols that operate in a way that seems more centralized than the name suggests.
Generally many protocols claim decentralization, but they rely on such centralized service providers Amazon Web Services to make sure they can walk.
Due to a major AWS shutdown, the dYdX exchange is now down. We are experiencing greater latency between defective services and functionality with endpoints not working and websites not loading.
For the latest status updates, subscribe to: https://t.co/EvjpZdRyby
– dYdX (@dYdX) December 7, 2021
Another important example is when a project that claims to offer the government the right to have a token makes major protocol decisions without consulting with the community for advice and approval.
Movement by Terra (LUNA) to add BTC to the treasury as collateral for the TerraUSD (UST) stablecoin made headlines and was praised by many, but the move was never put on the Terra community to see what token holders thought.
While it is likely that the plan has been approved and the collapse of Terra will still happen, the blame may have fallen more on the community and less on Do Kwon, the project leader. It should also be mentioned that Do Kown has developed a cult that follows and often insults various people on Twitter.
One of the main principles of the cryptocurrency sector is adherence to decentralization and failure to do so often results in compromised networks and dissatisfied investors.
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