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

The crypto contagion sparked by Terra’s infamous implosion this season only spread to companies and protocols with “poor balance sheet management” and never the actual blockchain technology, states Kraken Australia’s md Jonathon Miller.

Talking to Cointelegraph, the Australian crypto exchange mind contended that sectors for example Ethereum-based decentralized finance (DeFi) revealed its fundamental strength this season by weathering severe market conditions:

“Some from the contagion that people saw across a few of the lending models within the space, [is at] this traditional finance type of lending model sitting on the top of crypto. What we did not see is a type of catastrophic failure from the underlying protocols. And i believe which has been identified by many people.”

“Platforms like Ethereum didn’t fail once the volatility hit. You saw decentralized markets, decentralized lending models, DeFi generally, not fall over. There wasn’t any contagion there. That which you saw was poor balance sheet management from closed shop trade fee lenders,” he added.

Miller’s comment comes despite CoinGecko reporting a 74.6% market cap decline in DeFi during Q2 2022 following a collapse of Terra and a boost in DeFi exploits. Although the crypto data aggregator also noted the industry were able to retain the majority of its daily active users. 

Miller also added that blockchain projects only encountered issues when the style of their underlying protocols was “obviously poor”, like the situation of Terra’s algorithmic stablecoin TerraClassic USD (USTC).

“I think this is a downside. There is a Treasury management problem, not really a blockchain problem,” he stated.

Asked about how exactly Kraken fared with the crypto bear market this season, Miller recommended the organization was well primed to handle the volatility. He noted that the organization has survived many downturns in the 11-year history, and particularly didn’t blow lots of money on marketing throughout the bull run this past year.

“We’re inside a slightly different position as possibly a few of the other exchanges which have been available spending a lot of money on advertising. We have had a really strong word-of-mouth business design,” he described.

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

Miller seemed to be positive concerning the current condition from the Australian crypto sector, proclaiming that there are plenty of “bullish underlying signals from companies who’re still building products.”

He pointed to major banks for example ANZ lately testing using its very own stablecoin on Ethereum, and major payments giants for example Mastercard joining the Blockchain Australia Association, signaling strong “intent to get involved with crypto and blockchain.”

“So you realize, institutions utilizing the underlying tech, maybe some heat from a few of the speculative characteristics, that people saw through 2022, that is potentially a good factor.”

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