Do Kwon Interview Summary | Is a collapse considered a scam? Whose idea was the 20% APR? Did anyone participate in shorting?

It has been around three months since the Terra ecosystem collapsed due to the UST detachment, and its founder Do Kwon's influence in the crypto community has gradually waned. Recently, Do Kwon was interviewed by the foreign media Coinage, with host Zack Guzman asking probing questions, addressing most people's doubts about the overall event and Do Kwon.

This translation and summary are provided based on the interview. For any uncertainties, please refer to the video. Before reading, you may also refer to the introductory article: "How $84 Million Unlocked a $40 Billion Financial Empire - The Rise and Fall of UST."

Do Kwon: Down Infinity

The Coinage team traveled to Singapore for a two-day interview with Do Kwon specifically for this episode. After explaining the rise and fall of the Terra ecosystem, host Zack Guzman began asking Do Kwon the key questions on people's minds.

Zack Guzman: Were you surprised by the speed at which the UST went to zero within 72 hours?

Do Kwon: I never imagined such a thing would happen. For the past five years, my waking hours have been dedicated to building the Terra ecosystem and community, and I still can't find the words to describe how I feel about this turn of events.

Zack Guzman: Anchor's APR is 20% instead of the typical 8%, and some employees feel that such a high APR may not be suitable. What are your thoughts on this?

Do Kwon: Let me clarify. The initial internal consensus was to set the APR at several thousand percent, but it was realized that this would not sustain the protocol in the long run. Therefore, Anchor initially offered lower interest rates, which later became significantly higher.

Zack Guzman: Where did the idea come from to use multiple assets as reserves for Anchor? Why implement such a plan?

Do Kwon: We initially introduced Bitcoin because we believed it was the most resistant and unbiased digital currency. However, if we optimize for economic stability, we may use other stablecoins as reserves.

I think I placed too much trust in Bitcoin to some extent. Honestly, I didn't think it could drop so much, even though I know there have been cases of 80% drops in history.

At the time, I believed that the investment in this industry, whether in terms of economics or talent, was unprecedented, and the decentralized world and innovative products would begin to demonstrate their resilience. However, I was wrong.

Zack Guzman: What actions did the team take when UST unhinged?

Do Kwon: I was in Singapore at the time and woke up in the morning to find that Curve's liquidity pool was imbalanced due to significant transactions being made in the pool.

The atmosphere on Twitter gradually worsened, with more people trading in Curve's pool, leading to increasing selling pressure.

In the evening, we decided to spend $2 billion to address the situation. However, this information leaked, causing a massive shorting of LUNA in the market, and the funds we used to prop up the market were basically offset.

Zack Guzman: How much personal loss did this event cause you?

Do Kwon: When the market sentiment turns sour, people often jokingly use "Down bad" or "Down horrendous" to express how dire the situation is, but I would use "Down Infinity" to describe what happened.

Terra and Luna are essentially everything to me. I trust them, and my actions are intertwined with them.

I made a huge bet, but I think I lost.

Note: Infinity means limitless, and Do Kwon likely meant to express that the situation was unimaginably bad.

Zack Guzman: Former and current employees of Terraform Labs are unable to leave South Korea and are subject to legal investigations. Do any of them think you should return?

Do Kwon: It's difficult to make that decision now because I have never been in contact with any investigators, and they have not charged us with anything.

Zack Guzman: If you don't believe the whole incident was a fraud, what is the simplest argument to defend that stance?

Do Kwon: I don't think it's a moral issue. When the entire industry experiences such a massive collapse, it takes a considerable background in technology to understand the process and come to a balanced conclusion, especially in an environment filled with pain and anger.

Zack Guzman: How do you define fraud?

After a long silence, Do Kwon said: If you know something is not true but argue that it is for personal gain or other reasons, that is fraud.

Zack Guzman: If you were likened to Elizabeth Holmes, do you agree? Elizabeth Holmes exaggerated the functionality of her product.

Do Kwon: I disagree because Theranos' blood testing device was entirely non-functional. If a device initially works but later becomes unusable, then that would be a fair comparison.

Note: Elizabeth Holmes is the founder of the biotech startup Theranos established in 2003. The company developed the blood testing device - Edison, claiming it could detect hundreds of diseases with just a few drops of blood, raising billions of dollars. However, internal whistleblowers later revealed the product's instability and extreme inaccuracy, failing to deliver on its claimed functionality.

Zack Guzman: Was there anyone in Terraform Labs leaking internal information secretly?

Do Kwon: I believe there was, but if there were opportunities for insiders to exploit weaknesses, the blame should first fall on the one who allowed the vulnerabilities to exist, which is me.

I have to bear the responsibility for any exposed flaws that allowed the shorts to profit.

Zack Guzman: Did you short sell?

Do Kwon: I have never short sold any cryptocurrency in my life, let alone LUNA or UST.

Zack Guzman: What does naming your daughter Luna mean to both her and you?

Do Kwon: It gives me the drive to ensure that my daughter is not ashamed of her name. I will not change the name because Luna holds significant meaning for our family history.

In the future, I will continue to build, and if my theories are not wrong, what I create in the next twenty years will be more meaningful than the past six weeks.