First of all, I’d like to say my heart goes to everyone who has lost money or got liquidated due to recent events. I myself have been liquidated, and while it’s still a few months of hard work (only got into crypto early this year), it’s probably nothing compared to what most of you who had been here much longer had.
From what I’ve been reading on twitter, I thought that a big part of the attack happened on CEXs and that the mechanisms on the chain itself, i.e. the mint and burn mechanism were working just as intended. But because there was FUD, that probably got a lot of people scrambling to exit the ecosystem and move to other chains.
Now, in TradFi where I used to work, there were circuit breakers in place to manage large market swings. In essence, trading activity is halted (or suspended) to give participants some room to breathe (and maybe for logic to overtake emotion). But these decisions are typically based on regulations, or the rules of an exchange. Since crypto is decentralized, we don’t have rules in place unless the community decides to write it.
So to bounce the idea – what if we had a circuit breaker in place to prevent runs like this from occurring in the future? Perhaps by way of vote, where a majority or a sizable percentage (80%-90%?) can vote to suspend activities on the chain (essentially turn it off). A mechanism like this in theory should buy Do and the rest of TFL / LFG more time to decide the best course of action, without having to rush through options.
What I have in mind is similar to a bank outage when they realize there’s an issue with their system/machines that poses a significant amount of value at risk. For a day or two, customers won’t be able to access their funds. But they know that when the system comes back online, their assets would still be there.
Anyway, it’s a crazy idea. And I’m sure I missed out on a lot of things because I’m still pretty new to the space. I’d be interested to read on what you guys think though.