Indian DeFi Enthusiasts Call FTX Collapse ‘Good On A Macro Level’, Here’s Why

FTX, the US-based crypto platform that succumbed to liquidity crisis and shook up the crypto market in November led to the wipeout of nearly $200 billion (approximately Rs. 16,53,499 crore) from the market. The drastic reaction of investors withdrawing capital from digital assets left several crypto companies gasping. According to Indian Web3 builders, despite its severity, this FTX collapse should be seen as a “blessing in disguise” that has already begun to push for a more refined financial structure around crypto that would reduce the oft-criticized element of volatility.

“The companies that don’t have strong foundations and strong investments will be washed away,” said Tarusha Mittal, the COO and co-founder of the Web3-focused app store, Dapps, and group farming and restocking protocol, UniFarm.

Speaking to Gadgets 360, Mittal said crypto players and investors need to realize now more than ever that Web3 is all about decentralization.

“The collapse of FTX is good for the industry on a macro level. The collapse of FTX is a good reminder that crypto is about removing centralized authorities and regaining financial responsibility and independence,” Mittal noted.

Web3 is popularly explained as the emerging next generation internet as we know it today. Instead of being controlled by servers and big technology companies, Web3 will be based on blockchains, which are not controlled by centralized authorities and thus offer complete freedom with irreversible records of all processes.

Cryptocurrencies, Metaverse, NFTs and Decentralized Finance (DeFi) — are the new technologies that will provide special elements that will be part of Web3.

Mahin Gupta, the founder of digital wallet service provider Liminal, also weighed in on the FTX situation. He said major incidents like this could drive adoption of key Web3 tools, which are available but not yet the first choice for investors.

“Moving to DeFi at the earliest is key to learning from the collapse of FTX and it is up to industry players to build a safety net around user funds. Self-custodial or licensed custody services should be actively used to store digital assets that are under the full control of the users rather than companies,” Gupta told Gadgets 360.

After FTX declared bankruptcy, several crypto exchanges seemingly lost active users.

From both India and other countries, established exchanges such as Binance, KuCoin and Giottius conducted audits of their reserves to assure customers that their funds were safe in times of mass emergency withdrawals.

Market leaders still believe the crypto community is ready to move into the next year, with more transparency than we started with in 2022.

“Significant technological advancements have been made in the industry to improve transparency and security. The downturn in the crypto and stock markets is a result of several macroeconomic factors that have affected investor sentiment. As we enter the new year, it is a good opportunity for crypto investors to review their portfolios and strategize their investments and security solutions for better outcomes,” Edul Patel, CEO and co-founder of crypto investment firm Mudrex, told Gadgets 360.

Cryptocurrency is an unregulated digital currency, not legal tender and subject to market risks. The information in the article is not intended to and does not constitute financial advice, trading advice or any other advice or recommendation of any kind offered or endorsed by NDTV. NDTV is not responsible for any loss resulting from an investment based on any observed recommendations, forecasts or other information contained in the article.

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