A falling crypto token.
Illustration: Christopher T. Fong/Protocol

The crypto crash, explained

Source Code

Good morning! The stock market is tanking and crypto, which has been on a meteoric rise, has seen its gains wiped out what feels like overnight. Maybe WAGMI and HODL aren’t gonna cut it anymore. I’m Owen Thomas, and I think of myself less as a no-coiner and more as a d’oh-coiner.

Also, we want to know the first device that changed your life. Read the bottom for more, then respond to this email and let us know.

Crypto winter is here

As Coinbase shares entered free-fall, bitcoin kept crashing and the UST depeg made its way to the Capitol, there doesn’t seem to be much point in asking if we’re heading toward a crypto winter anymore. Winter isn’t coming, Jon Snow. It’s here.

“Have no fear, it’s peer-to-peer!” Crypto isn’t a democracy, it’s a cheerocracy. And the collapse of asset prices is totally spoiling the feel-good, “we’re all gonna make it” vibes that helped fuel crypto upwards in 2021.

  • Let’s be real: There’s a part of the crypto world that doesn’t really care about the blockchain or tokenomics or smart contracts. They’re just in it for the fun and the promise of making money. Even as the market was melting down, internet manners expert turned Web3 promoter Randi Zuckerberg was still making peppy videos. Her latest is about Ethereum, to the tune of “Titanium.” I watched it so you don’t have to. No word on whether David Guetta has sued her yet.
  • There’s a whole generation of TikTok crypto influencers who are extremely confused and upset right now. What happens when they stop using Cash App to buy bitcoin?
  • Bored Ape prices are trending down, but don’t pay attention to that! “The #1 rule … WE DO NOT TALK ABOUT FLOOR PRICE,” Zuckerberg instructed us, and she has a .eth domain name, so we better listen.

When the tide goes out, we learn who’s swimming naked. Seriously, couldn’t they have bought some Speedos along with their Lambos? Price charts that go down and to the right — they can do that? — are providing a stress test for crypto, and some are flunking.

  • The most naked of all is the Terra network and its UST token. UST is an algorithmic stablecoin, which means it’s backed up not by dollar-for-dollar reserves like Circle’s USDC, but by a series of programs that are supposed to automatically burn or mint UST to keep the price steady.
  • Here’s the catch: After a big drop in bitcoin shook the crypto markets, UST lost its peg to the dollar. Its backers attempted a rescue, but didn’t have nearly enough funds. And the automated systems, it turned out, had a big flaw: They worked too slowly to catch up with all of the people trying to dump their UST.
  • Traders are smart — smarter than UST’s smart contracts, apparently. They did the math and sold or shorted luna, a corresponding token that’s supposed to be swappable for UST dollar for dollar. Are you confused yet? Maybe that’s part of the point: UST’s algorithmic complexity may have always been a facade.

The regulators are watching this all with alarm. Stablecoins were already a hot topic for their risks to the financial system.

  • The UST debacle caught the attention of Treasury Secretary Janet Yellen, who called it a “bank run” in a Senate Banking Committee hearing Tuesday. EU regulators are also watching — and considering banning large-scale stablecoins altogether.
  • Oh, and there’s this: Do Kwon, the head of Terraform Labs, the firm that developed UST, was reportedly behind another failed stablecoin called Basis Cash. His involvement wasn’t known because, like many in the crypto world, he operated under a pseudonym.

The last crypto winter came amid crashing prices and a regulatory crackdown on initial coin offerings. The question now becomes how long this one will last. Coinbase has lost 85% of its value, and Robinhood, which has made crypto a key part of its global expansion strategy, has been hit nearly as hard. The new buyers lured in by social media crypto cheerleaders and ubiquitous advertising might understandably feel burned. The thing is, with its overheated Web3 rhetoric about wealth and freedom, the crypto industry dug this hole for itself. Want out? Get a shovel.

— Owen Thomas (email | twitter | dog’s instagram)


The emergence of DeFi is shaking up the way consumers think about how they store value. For reference, Visa saw $2.5 billion of crypto-backed transactions in the first quarter of 2022. We’re seeing consumers really starting to use this in a way that even a year ago was kind of hypothetical.

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People are talking

Disney+'ssubscriber growth shows it's not the same as other streaming services, Bob Chapek said:

  • "[We] once again proved that we are in a league of our own."

Jack Dorsey said he wouldn't lead Twitter again:

  • "It's time to roll the dice again."

Brian Armstrong insisted that Coinbase isn’t at risk of bankruptcy:

  • “Your funds are safe at Coinbase, just as they’ve always been.”

Johns Hopkins professor Matthew Green doesn’t like the EU’s CSAM plan:

  • “This document is the most terrifying thing I’ve ever seen.”

Making moves

Instacart wants to go public. The company confidentially filed papers for an IPO, which could happen this year.

Chicken Soup is buying Redbox for $375 million in an all-stock transaction.

Morgan Gress Johnson joined Palantir as head of U.S. Government Comms. She was previously director of Strategic Communications at Invariant.

Julie Mossler joined Metaplex Studios as CMO. Mossler last held the same role at Paxos.

Michael DeAngelo joined Bill.com as chief people officer. DeAngelo helped grow Google’s people team throughout Europe, the Middle East and Africa.

Fidelity’s Marissa MacDonald is FTX’s new chief compliance officer. The hire will help FTX bring its exchange to New York.

In other news

Sonos has its own voice assistant now. The device is called Sonos Voice Control, and it's trying to win over customers by never uploading audio to the cloud.

Platforms can be punished for alleged anti-conservative bias under a new Texas law decided on yesterday. It's an unexpected win for conservatives.

A lot came out of Google I/O yesterday, including a new pair of AR glasses, an Android tablet and a smartwatch, and the move toward a new skin tone scale, which should improve its AI diversity for things like smartphone photos.

How exactly did Elon Musk reveal his Twitter stake? The SEC is investigating Musk for his late disclosure, but it probably won't get in the way of his takeover bid.

Jonathan Kanter can’t work on Google antitrust cases, sources told Bloomberg. Google has always wanted Kanter to be recused from its investigations given his previous work for its rivals.

Airbnb’s search looks totally different now. The listings prioritize unconventional homes over location as the company tries to support people working from anywhere.

Democrat Alvaro Bedoya was confirmed to the FTC. Bedoya’s a big privacy advocate and will likely focus on data abuse in his new role.

Hump Day has become the biggest work day. Many more U.S. workers are going to the office on Wednesdays, and some said its popularity has rid them of the Sunday Scaries.

Meta doesn’t want its Oversight Board’s help in content moderation policies related to the war in Ukraine. The company’s never backpedaled like this on a request with the board before.

Twitter made a game to help people understand its privacy settings. It’s called Twitter Data Dash, and it involves dogs.

What’s the first device that changed your life?

For some of us, the iPod was a revelation: The ability to carry around thousands of songs was an experience like nothing before. So we want to know: What other devices changed your life?

Was the BlackBerry a game-changer for you? How did you use your first flip phone? What did your first computer look like? Respond to this email and let us know (send pics of your devices if you have them!) and we’ll round up our favorites in the Sunday edition of Source Code.


Businesses — whether Web2 or Web3-oriented businesses that don’t want to hold crypto but do want to be able to interact with crypto holders — want to be able to offer that as a payment mechanism to their communities. The other is hands-on, where merchants are comfortable accepting crypto.

Learn more

Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

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