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Contagion only hit firms with ‘poor balance sheet management’ — Kraken Aus boss

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The crypto contagion sparked by Terra’s notorious implosion this yr solely unfold to firms and protocols with “poor steadiness sheet administration” and never the underlying blockchain know-how, says Kraken Australia’s managing director Jonathon Miller.

Talking with Cointelegraph, the Australian crypto alternate head argued that sectors similar to Ethereum-based decentralized finance (DeFi) revealed its basic energy this yr by weathering extreme market situations:

“Among the contagion that we noticed throughout among the lending fashions within the house, [was in] this conventional finance form of lending mannequin sitting on high of crypto. However what we did not see is a form of catastrophic failure of the underlying protocols. And I feel that’s been acknowledged by lots of people.”

“Platforms like Ethereum didn’t fail when the volatility hit. You noticed decentralized markets, decentralized lending fashions, DeFi typically, not fall over. There was no contagion there. What you noticed was poor steadiness sheet administration from closed store commerce charge lenders,” he added.

Miller’s remark comes regardless of CoinGecko reporting a 74.6% market cap decline in DeFi throughout Q2 2022 following the collapse of Terra and an increase in DeFi exploits. Although the crypto knowledge aggregator additionally famous that the trade managed to retain most of its each day energetic customers. 

Miller additionally added that blockchain tasks solely bumped into points when the design of their underlying protocols was “clearly poor,” such because the case of Terra’s algorithmic stablecoin TerraUSD Traditional (USTC).

“I feel that’s a commerce off. There’s a Treasury administration downside, not a blockchain downside,” he mentioned.

Questioned about how Kraken fared by means of the crypto bear market this yr, Miller urged the corporate was effectively primed to cope with the volatility. He famous that the corporate has survived many downturns in its 11-year historical past and notably didn’t blow some huge cash on advertising in the course of the bull run final yr.

“We’re in a barely completely different place as maybe among the different exchanges which have been on the market spending a lot of cash on promoting. We’ve received a extremely sturdy word-of-mouth enterprise mannequin,” he defined.

Associated: Crypto contagion deters investors in near term, but fundamentals stay strong

Miller was additionally optimistic in regards to the present state of the Australian crypto sector, stating that there are numerous “bullish underlying indicators from companies who’re nonetheless constructing merchandise.”

He pointed to main banks similar to ANZ not too long ago testing the use of its own stablecoin on Ethereum and main funds giants similar to Mastercard becoming a member of the Blockchain Australia Affiliation, signaling sturdy “intent to change into concerned in crypto and blockchain.”

“So you understand, establishments making use of the underlying tech, possibly some warmth out of among the speculative traits, that we noticed by means of 2022, which is probably even factor.”