The FTX Fallout and Web3

The FTT token, the native token of the FTX exchange dropped from $19 to under $4 in a matter of hours (currently it’s $1.06 at the time I write this), but what does this mean to the Web3 Space?

to put things on a clear note, Web3 is something much bigger than crypto, the events of the past week have left people doubting the trust and stability of web3.

But why did FTX collapse?

Throughout the events of the past week, the decentralized protocols and assets remained safe throughout. Unfortunately for many exchanges, it has been these crypto bank-runs where users have pulled assets off-exchange that have created the big crunch experienced by first FTX but also hitting other exchanges.

What does this mean to Web3?

The vast majority of the activities that happened in the past say the hype about NFTs and Meme Coins, were just Financial Speculations. Early investors in crypto projects or NFTs could see their investments skyrocket, generating returns of 100x or even more. This meant for a majority of users, making money was the primary use case.

For many web3 projects and protocols, it is business as usual. Yes, they have seen the value of some of their assets drop significantly, but this does not challenge the viability of web3. It is this belief in the underlying potential of the technology that keeps builders building, not the price of crypto assets rising and falling. Decentralized applications and protocols that do not rely on centralized intermediaries such as FTX.

The public’s faith in web3 via crypto has unfortunately been challenged. But having a quiet period is good for innovation and getting things done, without new entrants being caught up in the hype. It has been a difficult week, but it hasn’t changed the views of web3, and this is what will ensure this technology keeps moving forwards into the future.