I came across news of another crypto lending platform halting withdrawals due to liquidity issues. We know the mainstream media still aren't sold on crypto, so bad news quickly gets all the attention. What is perhaps more surprising is the fact that the crisis had been predicted and somewhat expected by the community.

It is unfortunate that in scenarios like this we are again forced to criticize the legitimacy of the Blockchain. Many are quick to call it a scam without caring about getting the facts right. A project may be failing, but that is in no way representative of the chain.

In the mainstream sense, we have companies that fail all the time, leaving investors funds in limbo. Why then should it come as a surprise that some crypto projects are failing when many of them operate using the same business models. We need to accept the fact that many projects are going to fail moving forward, and seeing scams in all those projects doesn't help matters much.

Panic Test

Yet I think we can handle potential downturns in more matured ways without creating unnecessary panic among investors and the entire community as a whole. For instance I'll like to believe the UST crash could have been prevented with a better business model that didn't rely heavily on a single major investor. For some it is the project viability, vision and even community.

The way we handle projects certainly will affect their viability in the future. So often a projects failure comes from internal processes rather than external ones. When a project is bound for failure, there are almost visible warning signs in the early days of operational existence that stand out. Even more glaring is how things shape up when the project is under significant stress due to internal or external circumstances.

When we have companies halting withdrawals and the likes those are clear signs that they have bitten more than they can chew. The way such issues are handled should make investors very weary about the future of such a project.

Hive had its own stress test during the extended period of low price value. The response from the developers was to keep upgrading and improving the chain while the community saw it as a significant time to grow their assets. That's the difference between a project that offers value and one that serves as a mere pumping and dumping ground I believe.

Conclusion

Crypto is still very much the wild west. Be careful with the projects you decide to invest in and take time to always look out for potential red flags