We’re still firmly in Hard Times. Sure, my article last week about price and macro risk was published just before an eight-hour flurry when bitcoin gained 6.35%, but both hazards remain salient. This article is the second in a three-part series about the risks facing cryptocurrency markets right now. Next week we’ll look at public company risk.
This week we’ll explore platform and protocol risk, which is one of my favorite topics in crypto because it’s the main area people try to get a “gotcha!” on me by conflating the latest failing in decentralized finance (DeFi) as a failing of Bitcoin. But this conflation, coupled with all the countless crypto hacks and failed blockchain projects, is exactly why we should pay attention to this risk vector. What exactly platform and protocol risk means is straightforward. Protocol risk includes the risk associated with failures of the various crypto projects (i.e. protocols), like Bitcoin, Ethereum and Terra. Platform risk includes the risk associated with the failures of the institutions that have cropped up around crypto (i.e. platforms), like Coinbase (COIN), Three Arrows Capital (3AC) and Celsius Network (Celsius).
Read more : Opaque Platforms and Intertwined Protocols Pose Big Risk to Crypto.
