Ethereum co-founder Joseph Lubin on NFTs and the FTX fall

When asked for his thoughts on the recent fall of FTX, Lubin did not shy away from discussing the devastation and pain it caused. He was also honest in noting the damage it did to the NFT space – both to its image and to the individuals in it.

However, he was also quick to note that existing economic systems are also full of problems. “A lot of people have been hurt for millennia by bad centralized systems. You can hide information, you can cheat in so many different ways,” Lubin noted with a shake of his head. He went on to note that while the recent FTX debacle sent ripples through Web3, it is beneficial in that it highlights the importance of having decentralized systems. Centralized systems, he argued, are controlled by a single authority, which increases risk. “I’m grateful that it will enable us to drive a narrative which really shows the value of decentralization in strong terms,” ​​he said.

Lubin’s sentiments are far from rare in crypto circles. Amanda Cassatt, founder of Serotonin and former head of marketing at Consensys, made similar statements in a recent article. Ultimately, she argued that centralized crypto companies are no different from the big banks, which have long gambled with – and lost – user funds. “These are all centralized exchanges and centralized funded platforms. Their business models are centuries old; the only new thing about them is that they offer users exposure to cryptoassets…like the financial institutions that collapsed in 2008, their financial incentive is to under-insure and take risks with user funds,” she said.

But whether DeFi provides a more stable model, as Lubin and Cassatt claim, remains to be seen.

While Lubin joked that the crypto industry owes a huge debt of gratitude to FTX’s Sam Bankman-Fried for “sacrificing himself” so that we can collectively point out worst practices in the industry, he soon turned his attention to the NFT space. Drawing a parallel between the “irrational exuberance” of the dot-com boom and the often overhyped nature of the NFT community, Lubin noted that, as he sees it, Web3 is on the right track.

“We’re now in this creative destruction phase where all the pieces are being put back together, and a lot of people with expertise from the last few years are now figuring out the right things to do,” Lubin said. “So we’re in this phase where we’re not dreaming up a future and telling people how great the future is going to be; we’re actually building.”