"Depegging" is an interesting term. A scam, bolstered by lies and fraud, fell apart. A made up claim that they could financially match a useless asset to a useful fiat currency.
In fact banks are not allowed to take this much unbounded risk with their deposits to begin with.
web3 people are cynical about the traditional system but they often forgot how much protection existing regulations offer and that the bad things are often due to bad actors slipping through cracks and make a big impact. Such as the Korean hedge fund manager that leveraged himself beyond what regulations allow in spirit by hiding his exposure.
In crypto there are not just cracks, there are gaping holes.
There are some costs associated with that protection; to put it mildly. It isn't like the regulators protected the system in 2008-era with their prudent de-scamming, they protected it by handing out money to incompetents.
There will be a lot of pain from scams and immutability. It still seems entirely possible that in a few decades crypto as a whole will be more respectable than the US dollar. The US have been a reliable custodian only by comparison to other governments and there are obvious advantages to crypto vs currency backed by guns and printing presses.
Although I do agree things like Luna are certain disasters in the making best avoided completely.
Can you elaborate? I'm mostly pro-crypto, but it feels like it's really begun to stagnate since early '21.
Also, How will proof of stake not lead to big incumbent actors that control everything, like the US bulge bracket?
My guess is the whole thing is going to collapse in a flaming implosion, leaving broken and dismembered financial entities in its wake. Then it'll rebuild. The cycle will happen 2-3x more times, building up some evidence for what value propositions crypto has and then the show can go properly mainstream.
Something like the early internet. People got very overexcited, things fell apart, then a bit later the likes of Amazon turn up and start using it for serious projects.
> Also, How will proof of stake not lead to big incumbent actors that control everything, like the US bulge bracket?
No idea. Nor much care. If it is worst than the US fiat system then nobody will use it, if better then good.
After that, banks faced a lot more scrutiny and are still not allowed to take many big risks. Archegos was the worst thing that happened to a bank in the last decade. The market has been crazy in the past 2 years and no bank went bankrupt. If not for regulations instituted since 2008, there could have been a bank that went down like Maven Capital.
The banks should never have been in a position to repay those funds. Institutions that screw up that badly should be disbanded and replaced by someone completely different. Maybe swap the executive team and the office cleaners, I dunno. Anyone else. Totally different corporate culture.
But, happily, whoever is unhappy about it can start looking to crypto to see if there are alternatives. I don't think there are yet, but an an economic cycle or two the whole issue may well be a moot point.
It is like Elizabeth Holmes being told that her tests were faulty and she still does not fix them.
Elizabeth Holmes didn't have faulty tests. She literally lied and defrauded investors about having the thing she was working on. That's actually a bad example to compare to the UST situation because that thing was out in the open, including how it worked. A scam requires some deliberate deception or lying. A bad idea is not necessarily a scam, and dumb people knowingly pouring money into a bad idea is also not a scam. If it was a scam in any way, it was a failing of governments of wherever you lived letting you invest in this.