Things you might want to know about FTX／Binance turmoil

For those who barely knows what happened

• The acceptance of the bailout confirms the defect on the group’s operation — Alameda Research (SBF’s trading arm) is overly collateralising $FTT ( FTX’s token) to borrow money. When investors’ confidence shakes, the value of $FTT drops and instantly the collateral are illiquid assets. Now Binance shows intention (no legal terms signed) to be bailing out FTX.com and Alameda is apparently not on this lifeboat.
• Binance has consolidated the position of global dominance in crypto space. Below shows the degree of dominance when you combine the figures of Binance and FTX post-acquisition.

• As a result of this, we can expect credit contraction incoming.
• Binance is a centralised exchange. Your assets on Binance are in our legal possession yet not technically. There could be a chance that users’ fund are mobilised for unapproved purposes.
• 2 days ago, no one in crypto space could even imagine FTX is going down. So what can happen, will happen. Murphy’s Law is again proven — so please put your assets in self-custody wallets or even hold wallets.

Some thoughts about the future of crypto space

• The strategic importance of acquisition, apart from absorbing FTX’s trading volume, also lies in the company’s investment coverage on blockchain infrastructures and startups. Now Binance owns them and CZ’s influence over the crypto space drastically increases.
  Besides, did companies take $FTT as investment money? As if they did, what we could expect is way more than credit contraction.
• Some view this as an orchestrated attempt on FTX — so if this could happened on FTX, this would happen to any centralised exchange, or even blockchain companies in the future. Conspiracy aside, it calls for more transparency of centralized exchanges’ operation.
  Plus, CZ now has the very power to steer the fate of the industry and if he is to leverage political power, there will be no stopping force for him.
• The community are reminded the the risks of centralisation, decentralised products (Defi protocols and DEX) gain confidence from community, especially to those who are already in crypto game but are unfamiliar with DEX/Defi.
• The development for decentralised products are expected to accelerate since this turmoil.
• It took only a media coverage and a few tweets for the second largest exchange to go bank-run. The crypto space is early.

Welcome thoughts and discussion. Reach me via telegram @kylehimself.