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The FTX situation is not the same, but it rhymes. The role of TerraUSD — the “debt” — is played here by FTX’s customer balances; the role of Luna — the backing token — is played by FTT and SRM. In both cases, confidence in the business collapsed, and it turned out that the debt was actually backed by nothing.
FTX’s Balance Sheet Was Bad
bloomberg.com
Community moderation works. This was the overwhelming lesson of the early internet. It works because it mirrors the social interaction of real life, where social groups exclude people who don’t fit in. And it works because it distributes the task of policing the internet to a vast number of volunteers, who provide the free labor of keeping forums fun, because to them maintaining a community is a labor of love. And it works because if you don’t like the forum you’re in — if the mods are being too harsh, or if they’re being too lenient and the community has been taken over by trolls — you just walk away and find another forum. In the words of the great Albert O. Hirschman, you always have the option to use “exit”.
The Internet Wants to Be Fragmented
noahpinion.substack.com
But in the merger agreement, there are also covenants, promises that Musk and Twitter make to each other about what they will do going forward, between the signing of the merger agreement and the closing. If Twitter breaches a representation, Musk still has to close unless the breach causes a material adverse effect. But if Twitter breaches a covenant, Musk can walk away: He doesn’t have to close unless Twitter “shall have performed or complied, in all material respects, with its obligations required under this Agreement.” There is no MAE requirement: You just have to comply with the covenants.
Elon Has a New Bot Excuse
bloomberg.com
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