One working definition of a bull market: it’s whenever we’re celebrating assholes.

One working definition of a bear: it’s whenever we’re celebrating their downfall.

All of which is to say—to tell the story of Do Kwon is really just to tell the story of us.

In a constellation of alternate worlds, each with their own variant histories and errant quirks with a squinting resemblance to our own, I’d like to think that there are one or two planets—not the majority of planets, of course, but one or two misbegotten, slightly malnourished cousins of the planet earth—where Terra actually worked.

The story of Terra as one of the all-time greatest ponzis has already been cemented as Biblical fact—so conclusively, a week or so after its fall, that we might forget that basically nobody was saying this shit a few weeks ago. Cowardice, surely. But a few weeks ago, even as investors worried about Terra’s sizable risks, the story of Terra was not the story of a ponzi.

A few weeks ago, the story of Terra was the story of millions of users who could use its wallet to pay for offline goods in South Korea, the story of its savings account Anchor scaling back interest rates in order to avoid depleting the reserves, the story of its leader, Do Kwon, promising to back its stablecoin UST with Bitcoin and a basket of other currencies. In other words, it was the story of a protocol taking frantic measures to secure its legitimacy, even as its own overconfident narrative couldn’t help but signal its underlying insecurity.

After all, it was also the story of a protocol with a vibrant developer ecosystem and a native token, Luna, providing tangible security to protect this ecosystem. One would hope that the growing value of that security for Terra projects would be great enough to back an otherwise unbacked stablecoin, UST, that could be traded in for $1 of Luna at any moment—and perhaps, if Terra had continued growing for another year or two, with massive projects built on its protocol, it might have been.

It’s worth heeding the Terra critics here. As Luca Prosperi put it a few days ago, “A longer bull market, lower inflation data, the avoidance of a few tactical mistakes, could have made an epic bankruptcy into a success.” Per Recovering TradFi Chad, “the field is wide open for a Terra redesign that’s flexible and moderately conservative with a decentralized reserve management system, a living will, transparency around protocol expenses, [and] a fixed off-chain burn mechanism.”

None of that means that Terra wasn’t, in the short-term, a ponzi, but that back on our unlikely, alternative planet, its ponzomics might have bootstrapped real-world use-cases that would drive value to Luna, and these ponzinomics might one day be known only as temporary ponzinomics, or what is popularly known as “customer acquisition costs.” One of the biggest mistakes we can make is to assume that the historical consequences are deterministic, that the failure of a project means it was doomed to fail, that bad outcomes can only equate to bad decisions, that there isn’t some planet, somewhere, where it might have succeeded.

Which leads to the next point: the antics of one Do Kwon.

Kwon’s chest-pounding, hammer-headed, hubristic meet-me-at-the-flagpole mix of impish jester and absolute dickhead has of course augmented the Big Villain Energy he might have already earned from losing billions of dollars of his supporters’ money in a couple days. It is very hard to understand the story of Terra as anything other than a ponzi, retrospectively, when its leader was openly deceiving investors about the risks of his project by daring them to take him on in an on-chain bro-à-bro.

https://twitter.com/stablekwon/status/1506494471873081352

https://twitter.com/stablekwon/status/1464897977793728514   

https://giphy.com/gifs/south-park-gif-broadway-bro-down-P6BnLO7FhXGz6

But I want to make another point here, that in Terra’s fake-it-til-you-make-it business strategy, Kwon’s fundamental leverage—the real collateral backing his project—was his social capital, social capital that would act reflexively on financial capital as well. To admit with full honesty that Luna was weak would make it so, just as to insinuate that it was unassailable might, just might, mobilize a Twitter army of “Lunatics” to defend its price at all cost. In that light, Kwon’s increasingly aggressive attacks on far more legitimate projects like MakerDAO might read as yet another desperate attempt—like the Bitcoin collateralization—to prop up a token that was facing devastating macro tailwinds.

This, for me, is the far more interesting story, not because it should make us more sympathetic to Kwon—it shouldn’t—but because it’s a story of social media’s greatest weapon:

Context Disruption.

The concept of Context Disruption is simple enough: some public figure acts in a way entirely unbefitting to their post of prestige, and hijinks ensue. A staple of populist comedy, Context Disruption might be tracked back to Euripides, who featured the majestic Greek Gods of Aeschylus and Sophocles as squabbling irritants in domestic rows: The Cyclops, for example, opens with a satyr complaining that he’s underappreciated for his fine culinary work cooking the flesh of the the Cyclops’ human victims, only for the Cyclops to complain that “when Zeus claps out his thunder,/ I from my blankets blast out a fart.” Nearly all of Frank Capra’s comedies concern the Context Disruption of an aw-shucks all-American blasting down the gatekeepers of institutional privilege with a cornpipe-as-moral-compass. But perhaps the greatest, clearest example of Context Disruption is Charlie Chaplin’s rendition of Hitler bopping the globe off his ass in a sad, touching, monstrous seduction of man and world:

The reason the scene works isn’t just because it repositions a bloodthirsty dictator as a ballet dancer in love with a balloon, but because this incredible puncturing of the Hitler myth only reaffirms what we already suspected: that the dictator is delusional, frustrated, power-obsessed. Part of the point of Context Disruption is that it can’t be that disruptive to work. At some level, it has to reassure us of our base expectations. At some level, we want to know that our leaders aren’t the opposite of the powerful people we expect them to be, but that they’re eagerly embracing that power in the most relatable ways. At some level, we want to know that the most powerful people in the world react with the same transgressive glee as a poète maudit or our shittiest, dumbassest friend: that they fart in meetings, call their advisors “bruh,” and react to life-or-death news with Pepe memes.

And that brings us to the past 10 years, a decade defined by the rise of populism—decentralization—in user-generated technology, grassroots political campaigns, and, yes, sovereign data and finance blockchains. This move towards user-generated politics has entailed a full-crusade against the ivory tower experts, culminating in the covid crisis, but a decade of a macro-bull market has ensured that at no time since 2011 have we been at war with power itself.

Indeed, while we’ve spent a full decade heroizing those who skewer institutional authority—starting with the Occupy Wall Streets and Arab Spring and Mannings and Snowdens—our greatest heroes quickly turned out to be those who skewer institutional authority while also representing that authority in the most prestigious and privileged ways. If you noted that the hypothetical examples of goblin mode above skewed toward frat bro, you were right: for it takes a certain kind of privilege, the privilege of the man-child, to be able to command and attack privilege in the first place.

And this has been the lesson of the most popular and often hated celebrities of the decade: Trump in politics, Ye in music, and Elon Musk in tech. And now Do Kwon in finance.

My main interest in Context Disruption, however, is as a *tool—*specifically, the last decade’s great tool for attention, authenticity, and antifragility.

Let’s break down each of those.

Attention:

It’s a truism at this point that the scarcest resource in the era of decentralization is time–knowing what to prioritize amidst a flood of user-generated information. (This is, in fact, the same problem that blockchains face as well.) That problem leaves us vulnerable—exhausted from the *meta-attentional* activity of trying to figure out where to place our actual attention, which becomes susceptible to the most sensational stories to give us stimulation. In the long slog of social media, we become emotional addicts, and the most colorful characters become our plugs. Businessmen come to play the role that Hollywood celebrities would have filled a century ago, exploiting social media to galvanize retail mobs to give their enterprises—and stock prices—legitimacy. The best entrepreneurs act like the worst actors, knowing that any scandal is better than no scandal at all, as political polarization generates faithful armies. And buzz, in a bull market, is what will keep them afloat.

Authenticity:

One way to understand social media is as a global scaling of community theater, which leads to a certain irony: the way to be authentic is to be as theatrical as possible, to acknowledge the fundamental inauthenticity of the medium in a lo-fi, relatable way. The most popular accounts on TikTok understand this perfectly—singing with a water bottle in your bedroom rather than a microphone in an arena registers as far more relatable not only because anyone could sing with a water bottle, but because anyone could also digitally edit themselves to appear in an arena, and choosing the cheeky path of bad theater means choosing to be honest about the inauthenticity of the whole thing. Kanye peeing on his Grammys or Trump’s “I could stand in the middle of 5th avenue and shoot somebody, and I wouldn’t lose voters” represent this same sort of self-aware theater—preposterous stunts that seduce us with a fuck-you into believing that the performers’ egomaniacal trips were a window onto their “real” personality. Partly these acts seem authentic since their creators will only perform to the extent of acknowledging that everything they say is performance. But mostly, they make their creators seem real since to be a villain is to be far more authentic than to be a hero.

Antifragility:

Despite their very great political differences, what Musk, Kanye, and Trump managed over the past decade was an extraordinary antifragility predicated on their own manic dualisms between being little kids and powerful adults: between being overly sensitive and overly insensitive, between being bulls in a china shop and owning the china shop, between saying whatever they felt like and saying that actually it was just a joke, didn’t you know? Any attack on their integrity could only make them stronger—partly because the joke was on you for believing them, partly because they had lured you into attacking them, hoping you’d fall into that gendered role of the schoolmarm criticizing the student who called out your repressive rules. After all, asking to be attacked is the surest way of appearing a victim while stealthily commandeering social media’s most potent weapon: optics. And this is the core of what made them antifragile. Each attack could only showcase their charm as a child who was secretly in control of the situation, which meant that mobilizing enemies to attack them was the best way of mobilizing supporters to defend them too. The more you hurt them, the stronger they would get.

As a final note, we might add that the playbook for all three of these points—attention, authenticity, and antifragility—was more or less written by the World Wrestling Entertainment in the late 80s or so. Its wrestling ring just became the world.

There is another word we used earlier for Context Disruption that’s much simpler: legitimacy. Attention claims it, authenticity secures it, and antifragility guards it from threat.

So from one perspective, Do Kwon had no choice but to play the game of Context Disruption to take Luna as far as he did. After all, what collateralizes an uncollateralized stablecoin is nothing more than legitimacy, the belief that others will also believe in the project and therefore uphold its value. Traditionally, legitimacy has primarily been a product of time, of lindiness, but Context Disruption works to scale mass support so quickly, in such a staggeringly short amount of time, that groups of followers believe others will come to believe in it as well. Of course, there is another name for this kind of effort too: not a ponzi, which would have to break down eventually, but a kind of religious scam that hasn’t really lasted long enough to become true.

A little over a year ago, I wrote a piece called “The Legitimacy Crisis,” in which I tried to argue that decentralization has broken down our social conceptions of our own self-worth—in ways that can send us searching for cults, attempting to tokenize our spiritual value, or, if we’re actually lucky, attempting to legitimize meaningful projects that can legitimize us in turn. The difference between Ethereum and Ethereum Classic, after all, is just one of social consensus; the value of the system derives from the value we ascribe to it.

One year later, the market has left us in a far worse legitimacy crisis, as major projects are daily outed as scams, and the vaporization of bull-market pile-ins has entailed a flash crash of belief. So we might say that if only Luna had stuck around a few more years while continuing to lower its payouts and up its collateralization, it might have become legitimate through lindiness—while Do Kwon’s twitter-evangelism might have become a self-fulfilling prophecy that willed real value out of the thin air of social media consensus.

But as Elon’s latest gambit to buy Twitter seems to be backfiring amidst collapsing Tesla prices, Trump struggles to rally his base after a failed reelection, and Ye is, well, Ye, we might wonder just how antifragile Context Disruption can be in a bear market—or at least, Context Disruption of the charismatically toxic male. It’s likely these figures will last, in some form or another: their cultural imprint is too big to fail. But the tale of Do Kwon still suggests that antifragility in one market might not be antifragility in another. What looked to be the story of a man who could make and break markets turned out merely to be the story of another guy who was made and broken by them.

And from that perspective, it was also Context Disruption that made and broke Do Kwon. In a bear market, just as rugs are good for revealing scams and hacks are good for revealing loopholes, empty threats are good for revealing confidence games from puffed-up egotists. Context Disruption could make Kwon a hero while prices went up, but could only make him a villain when they collapsed and it turned out that his vision had been a lie.

To put that another way, it’s at the moment that legitimacy vanishes that real legitimacy is born—the legitimacy to actually see things as they are. So as we move towards an uncertain future, it’s unclear whether the preachers of wealth can hoodwink us into their vision when we find ourselves bear-market sober: hungover, dazed, and suddenly far too clear-eyed. It’s another kind of Context Disruption—the disruption of a leader actually being honest, a bit boring, and a bit skeptical of their own power—that might be the legitimacy we need.

One working definition of a bull market: it’s whenever we’re celebrating assholes.

One working definition of a bear: it’s whenever we’re celebrating their downfall.

All of which is to say—to tell the story of Do Kwon is really just to tell the story of us.

In a constellation of alternate worlds, each with their own variant histories and errant quirks with a squinting resemblance to our own, I’d like to think that there are one or two planets—not the majority of planets, of course, but one or two misbegotten, slightly malnourished cousins of the planet earth—where Terra actually worked.

The story of Terra as one of the all-time greatest ponzis has already been cemented as Biblical fact—so conclusively, a week or so after its fall, that we might forget that basically nobody was saying this shit a few weeks ago. Cowardice, surely. But a few weeks ago, even as investors worried about Terra’s sizable risks, the story of Terra was not the story of a ponzi.

A few weeks ago, the story of Terra was the story of millions of users who could use its wallet to pay for offline goods in South Korea, the story of its savings account Anchor scaling back interest rates in order to avoid depleting the reserves, the story of its leader, Do Kwon, promising to back its stablecoin UST with Bitcoin and a basket of other currencies. In other words, it was the story of a protocol taking frantic measures to secure its legitimacy, even as its own overconfident narrative couldn’t help but signal its underlying insecurity.

After all, it was also the story of a protocol with a vibrant developer ecosystem and a native token, Luna, providing tangible security to protect this ecosystem. One would hope that the growing value of that security for Terra projects would be great enough to back an otherwise unbacked stablecoin, UST, that could be traded in for $1 of Luna at any moment—and perhaps, if Terra had continued growing for another year or two, with massive projects built on its protocol, it might have been.

It’s worth heeding the Terra critics here. As Luca Prosperi put it a few days ago, “A longer bull market, lower inflation data, the avoidance of a few tactical mistakes, could have made an epic bankruptcy into a success.” Per Recovering TradFi Chad, “the field is wide open for a Terra redesign that’s flexible and moderately conservative with a decentralized reserve management system, a living will, transparency around protocol expenses, [and] a fixed off-chain burn mechanism.”

None of that means that Terra wasn’t, in the short-term, a ponzi, but that back on our unlikely, alternative planet, its ponzomics might have bootstrapped real-world use-cases that would drive value to Luna, and these ponzinomics might one day be known only as temporary ponzinomics, or what is popularly known as “customer acquisition costs.” One of the biggest mistakes we can make is to assume that the historical consequences are deterministic, that the failure of a project means it was doomed to fail, that bad outcomes can only equate to bad decisions, that there isn’t some planet, somewhere, where it might have succeeded.

Which leads to the next point: the antics of one Do Kwon.

Kwon’s chest-pounding, hammer-headed, hubristic meet-me-at-the-flagpole mix of impish jester and absolute dickhead has of course augmented the Big Villain Energy he might have already earned from losing billions of dollars of his supporters’ money in a couple days. It is very hard to understand the story of Terra as anything other than a ponzi, retrospectively, when its leader was openly deceiving investors about the risks of his project by daring them to take him on in an on-chain bro-à-bro.

https://twitter.com/stablekwon/status/1506494471873081352

https://twitter.com/stablekwon/status/1464897977793728514   

https://giphy.com/gifs/south-park-gif-broadway-bro-down-P6BnLO7FhXGz6

But I want to make another point here, that in Terra’s fake-it-til-you-make-it business strategy, Kwon’s fundamental leverage—the real collateral backing his project—was his social capital, social capital that would act reflexively on financial capital as well. To admit with full honesty that Luna was weak would make it so, just as to insinuate that it was unassailable might, just might, mobilize a Twitter army of “Lunatics” to defend its price at all cost. In that light, Kwon’s increasingly aggressive attacks on far more legitimate projects like MakerDAO might read as yet another desperate attempt—like the Bitcoin collateralization—to prop up a token that was facing devastating macro tailwinds.

This, for me, is the far more interesting story, not because it should make us more sympathetic to Kwon—it shouldn’t—but because it’s a story of social media’s greatest weapon:

Context Disruption.

The concept of Context Disruption is simple enough: some public figure acts in a way entirely unbefitting to their post of prestige, and hijinks ensue. A staple of populist comedy, Context Disruption might be tracked back to Euripides, who featured the majestic Greek Gods of Aeschylus and Sophocles as squabbling irritants in domestic rows: The Cyclops, for example, opens with a satyr complaining that he’s underappreciated for his fine culinary work cooking the flesh of the the Cyclops’ human victims, only for the Cyclops to complain that “when Zeus claps out his thunder,/ I from my blankets blast out a fart.” Nearly all of Frank Capra’s comedies concern the Context Disruption of an aw-shucks all-American blasting down the gatekeepers of institutional privilege with a cornpipe-as-moral-compass. But perhaps the greatest, clearest example of Context Disruption is Charlie Chaplin’s rendition of Hitler bopping the globe off his ass in a sad, touching, monstrous seduction of man and world:

The reason the scene works isn’t just because it repositions a bloodthirsty dictator as a ballet dancer in love with a balloon, but because this incredible puncturing of the Hitler myth only reaffirms what we already suspected: that the dictator is delusional, frustrated, power-obsessed. Part of the point of Context Disruption is that it can’t be that disruptive to work. At some level, it has to reassure us of our base expectations. At some level, we want to know that our leaders aren’t the opposite of the powerful people we expect them to be, but that they’re eagerly embracing that power in the most relatable ways. At some level, we want to know that the most powerful people in the world react with the same transgressive glee as a poète maudit or our shittiest, dumbassest friend: that they fart in meetings, call their advisors “bruh,” and react to life-or-death news with Pepe memes.

And that brings us to the past 10 years, a decade defined by the rise of populism—decentralization—in user-generated technology, grassroots political campaigns, and, yes, sovereign data and finance blockchains. This move towards user-generated politics has entailed a full-crusade against the ivory tower experts, culminating in the covid crisis, but a decade of a macro-bull market has ensured that at no time since 2011 have we been at war with power itself.

Indeed, while we’ve spent a full decade heroizing those who skewer institutional authority—starting with the Occupy Wall Streets and Arab Spring and Mannings and Snowdens—our greatest heroes quickly turned out to be those who skewer institutional authority while also representing that authority in the most prestigious and privileged ways. If you noted that the hypothetical examples of goblin mode above skewed toward frat bro, you were right: for it takes a certain kind of privilege, the privilege of the man-child, to be able to command and attack privilege in the first place.

And this has been the lesson of the most popular and often hated celebrities of the decade: Trump in politics, Ye in music, and Elon Musk in tech. And now Do Kwon in finance.

My main interest in Context Disruption, however, is as a *tool—*specifically, the last decade’s great tool for attention, authenticity, and antifragility.

Let’s break down each of those.

Attention:

It’s a truism at this point that the scarcest resource in the era of decentralization is time–knowing what to prioritize amidst a flood of user-generated information. (This is, in fact, the same problem that blockchains face as well.) That problem leaves us vulnerable—exhausted from the *meta-attentional* activity of trying to figure out where to place our actual attention, which becomes susceptible to the most sensational stories to give us stimulation. In the long slog of social media, we become emotional addicts, and the most colorful characters become our plugs. Businessmen come to play the role that Hollywood celebrities would have filled a century ago, exploiting social media to galvanize retail mobs to give their enterprises—and stock prices—legitimacy. The best entrepreneurs act like the worst actors, knowing that any scandal is better than no scandal at all, as political polarization generates faithful armies. And buzz, in a bull market, is what will keep them afloat.

Authenticity:

One way to understand social media is as a global scaling of community theater, which leads to a certain irony: the way to be authentic is to be as theatrical as possible, to acknowledge the fundamental inauthenticity of the medium in a lo-fi, relatable way. The most popular accounts on TikTok understand this perfectly—singing with a water bottle in your bedroom rather than a microphone in an arena registers as far more relatable not only because anyone could sing with a water bottle, but because anyone could also digitally edit themselves to appear in an arena, and choosing the cheeky path of bad theater means choosing to be honest about the inauthenticity of the whole thing. Kanye peeing on his Grammys or Trump’s “I could stand in the middle of 5th avenue and shoot somebody, and I wouldn’t lose voters” represent this same sort of self-aware theater—preposterous stunts that seduce us with a fuck-you into believing that the performers’ egomaniacal trips were a window onto their “real” personality. Partly these acts seem authentic since their creators will only perform to the extent of acknowledging that everything they say is performance. But mostly, they make their creators seem real since to be a villain is to be far more authentic than to be a hero.

Antifragility:

Despite their very great political differences, what Musk, Kanye, and Trump managed over the past decade was an extraordinary antifragility predicated on their own manic dualisms between being little kids and powerful adults: between being overly sensitive and overly insensitive, between being bulls in a china shop and owning the china shop, between saying whatever they felt like and saying that actually it was just a joke, didn’t you know? Any attack on their integrity could only make them stronger—partly because the joke was on you for believing them, partly because they had lured you into attacking them, hoping you’d fall into that gendered role of the schoolmarm criticizing the student who called out your repressive rules. After all, asking to be attacked is the surest way of appearing a victim while stealthily commandeering social media’s most potent weapon: optics. And this is the core of what made them antifragile. Each attack could only showcase their charm as a child who was secretly in control of the situation, which meant that mobilizing enemies to attack them was the best way of mobilizing supporters to defend them too. The more you hurt them, the stronger they would get.

As a final note, we might add that the playbook for all three of these points—attention, authenticity, and antifragility—was more or less written by the World Wrestling Entertainment in the late 80s or so. Its wrestling ring just became the world.

There is another word we used earlier for Context Disruption that’s much simpler: legitimacy. Attention claims it, authenticity secures it, and antifragility guards it from threat.

So from one perspective, Do Kwon had no choice but to play the game of Context Disruption to take Luna as far as he did. After all, what collateralizes an uncollateralized stablecoin is nothing more than legitimacy, the belief that others will also believe in the project and therefore uphold its value. Traditionally, legitimacy has primarily been a product of time, of lindiness, but Context Disruption works to scale mass support so quickly, in such a staggeringly short amount of time, that groups of followers believe others will come to believe in it as well. Of course, there is another name for this kind of effort too: not a ponzi, which would have to break down eventually, but a kind of religious scam that hasn’t really lasted long enough to become true.

A little over a year ago, I wrote a piece called “The Legitimacy Crisis,” in which I tried to argue that decentralization has broken down our social conceptions of our own self-worth—in ways that can send us searching for cults, attempting to tokenize our spiritual value, or, if we’re actually lucky, attempting to legitimize meaningful projects that can legitimize us in turn. The difference between Ethereum and Ethereum Classic, after all, is just one of social consensus; the value of the system derives from the value we ascribe to it.

One year later, the market has left us in a far worse legitimacy crisis, as major projects are daily outed as scams, and the vaporization of bull-market pile-ins has entailed a flash crash of belief. So we might say that if only Luna had stuck around a few more years while continuing to lower its payouts and up its collateralization, it might have become legitimate through lindiness—while Do Kwon’s twitter-evangelism might have become a self-fulfilling prophecy that willed real value out of the thin air of social media consensus.

But as Elon’s latest gambit to buy Twitter seems to be backfiring amidst collapsing Tesla prices, Trump struggles to rally his base after a failed reelection, and Ye is, well, Ye, we might wonder just how antifragile Context Disruption can be in a bear market—or at least, Context Disruption of the charismatically toxic male. It’s likely these figures will last, in some form or another: their cultural imprint is too big to fail. But the tale of Do Kwon still suggests that antifragility in one market might not be antifragility in another. What looked to be the story of a man who could make and break markets turned out merely to be the story of another guy who was made and broken by them.

And from that perspective, it was also Context Disruption that made and broke Do Kwon. In a bear market, just as rugs are good for revealing scams and hacks are good for revealing loopholes, empty threats are good for revealing confidence games from puffed-up egotists. Context Disruption could make Kwon a hero while prices went up, but could only make him a villain when they collapsed and it turned out that his vision had been a lie.

To put that another way, it’s at the moment that legitimacy vanishes that real legitimacy is born—the legitimacy to actually see things as they are. So as we move towards an uncertain future, it’s unclear whether the preachers of wealth can hoodwink us into their vision when we find ourselves bear-market sober: hungover, dazed, and suddenly far too clear-eyed. It’s another kind of Context Disruption—the disruption of a leader actually being honest, a bit boring, and a bit skeptical of their own power—that might be the legitimacy we need.