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EXCLUSIVE: FatMan Speaks! Our One-on-One with the Terra Chain’s “Man of the People”

Happy Wednesday. It’s May 18, 2022.

Terra has collapsed. The TerraUSD is dead.

The last few days have been filled with coverage about its untimely demise. However, in Terra’s own Research Forum, plans are already being made about its comeback plan.

The chain’s foremost figure — Do Kwon, Terra’s controversial and brash founder, who often called his detractors “poors” among other choice things on Twitter — has one vision of its future. Unfortunately for scores of retail investors, it’s a vision where there are no refunds; there are few apologies and few concessions.

Fortunately for the largest holders of the Terra cryptocurrency or its not-so-stablecoin, it’s a partial bailout — and capital holders will be happy to get any portion of their funds back.

That is, unless, a proposal by an “average user” bests the one put forth by Terra’s leadership. The pseudonymous FatMan ascended to a form of crypto stardom after Kwon accidentally linked to his proposal on Twitter.

We took the opportunity to talk to Terra’s new “Man of the People” about his proposal for the future of Terra, his take on the Terra leader’s vision, and his temperature for whether or not Terra or TerraUSD were as safe as influencers and marketing bros made it out to be. 

It’s unlike us to run just a single story, but given the importance of Terra’s reconstitution and revival (and an impending governance vote on Do Kwon’s proposed revival plan), we wanted to run this prominently today.

Our regular coverage, and the price charts, will return on Friday. What follows is a Q&A with FatMan:


A Q&A With FatMan, Terra’s “Man of the People”

Who are you?

I’m a technical writer and project manager by trade. I’ve been heavily involved in the cryptocurrency space for a few years now, and I’ve witnessed a lot of things go down – the DAO hack, the Bitfinex debacle, a myriad of miscellaneous hacks & scams, and now this. I put a sizable amount of my savings into Anchor Protocol looking to achieve a low, stable yield on my dollars. Basically, I’m in the same boat as everyone else.

Ultimately, my intention was to be a guy with a plan – I thought I had a good proposal to move forward after this horrible incident and the community happened to rally around it. I’m really not that special and I don’t think my authority should be de facto respected. I believe every idea should be weighed based on merit and community consensus.


What was your reaction to the collapse of LUNA and UST? What impressions did you have about its collapse? Did you expect it?

I suspected that something of this nature was bound to happen eventually, insofar as UST demand would falter in a big way and LUNA would crash fairly hard. Given how all the events were playing out — 3AC’s massive investment, Do’s implication that he would add another $1 billion to the yield reserve, and Anchor’s growing popularity as a savings vehicle for the masses — I gave it a 1.5 to 2 year horizon.

My expectation was that Anchor yields would slowly drop as LUNA’s decline would affect staking interest, and as yields dwindled, capital from the Borrow side would also flow out. Eventually, Anchor would probably find equilibrium at an interest rate that was stable without requiring yield reserve top-ups. I was expecting a drop to something like 5-6% over the next several months.

There are two parts of this I did not see coming, and maybe this was a major part of my risk misassessment. I did not see UST depegging so hard and fast, and I did not see LUNA crashing 99% in a few days. It’s important to remember that a crash of this magnitude and speed is completely unprecedented in the crypto space. For something of so much aggregate value to come crumbling down within hours was both terrifying and stunning to behold. Watching savings that you’ve worked five years for come crashing down asymptotically to zero is something I wouldn’t wish on anyone.

In the coming months there will be a lot of hindsight bias and it will become common knowledge that the meltdown was both obvious and entirely predictable. It is true that you could have seen this coming if you knew precisely where to look and how to look at it. A select few figured it out — and by now they have become quite popular. But the truth is, if you go back in time four weeks, Anchor was considered very safe and to most people this would be something of a black swan event. Suffice it to say the vast majority of people could not have seen this coming – at least not like this. A lot of very smart people lost millions.

Another thing I didn’t foresee was that Terra’s downfall would be brought on by a malicious targeted attack from a large player who was both egged on and enabled by Do Kwon himself.


Based on your own experience with Terra and the risk of LUNA and UST, how substantial was the difference between the amount of risk these assets carried vs. the conception of its risk among the average investor (namely due to marketing and influencer content)?

Admittedly, given my background in cryptocurrency technical writing, I have a bit more knowledge in the field than the average non-crypto retail investor. I think the fact that this did not stop me from investing a decent portion of my savings into the protocol is a testament to how easy of a scheme it was to fall into.

I was aware of the LUNA/UST mechanism, but I misassessed risk. A portion of the blame definitely falls on me, and this is the case for every investment one makes. There are many factors that made me ignore the system’s shortcomings despite having looked through the algorithm with a fair level of scrutiny. I could write several pages about this, but off the top of my head, things such as LUNA’s meteoric rise, large, high-profile investments from big, successful crypto funds, Do Kwon’s passionate exuberance on Twitter, and UST’s previous tendency to retain its peg even in turbulent times were some of the factors that played into my decision-making.

It’s a different story for retail investors, who were told a fairytale of safety and stability. Anchor was very pointedly marketed as a safe savings account and the implied promise that UST would always be close to $1 was very strong. Anyone who dared question this was called “poor” by the CEO and his army. Exchanges listed UST alongside other major stablecoins. The yields were always in line with — if not less than — [other] DeFi staking yields, so it wasn’t a blatantly unbelievable Ponzi scheme… especially since in its infancy Anchor was 100% sustainable with an organically growing yield reserve.

Crucially, retail investors were not provided with meaningful disclosures about the stabilization algorithm and its risks when they were sold UST. It was nearly impossible for the layperson to have known better.


Do you think that Do Kwon and the Luna community knowingly misrepresented the riskiness of the chain and $UST? Do you think they knew it was going to collapse?

If you dig deep into Terra’s history, there are several aspects of the whole situation that point to the fact that Do Kwon knew there would be a spectacular collapse of the system.

He did not disclose that his company made Basis Cash, an algorithmic stablecoin that death spiraled in exactly the same way. He spoke about this issue in interviews with lower reach in which he was seemingly more candid, all while bragging about the peg’s invincibility on Twitter. As the machine grew, he was frantically pulling out large amounts of LUNA monthly, presumably because he knew the event horizon loomed ahead.

The marketing and messaging around Anchor and UST, specifically from him, was incredibly shady and seemed designed to pull in as much retail attention as possible. I can’t deny that he pulled it off brilliantly.


I guess that leads us to your proposal: can you tell us about the basis of your proposal and what you think should be done about the collapse of LUNA and UST?

I have seen firsthand the devastating effects of this meltdown on people’s lives. All of this started when a mutual friend back in Singapore committed suicide because of his Terra holdings, but since then, I’ve seen enough despair for a lifetime. People have been contacting me with stories and I can’t get some of them out of my head. People have lost homes, money for their children’s surgery, tuition funds, and years of their life.

Given that thousands of people treated Anchor as a savings vehicle, they ultimately lost money they could not afford to lose. It is common knowledge that you put disposable income into risky assets like altcoins and you put savings into safer vehicles like stablecoins. The messaging surrounding Anchor caused thousands of retail investors to put in their savings, for which they can now get a measly $0.08 on the dollar.

My proposal sought to help people who needed it the most — a disbursement of money to smaller UST holders whose lives could potentially be saved if they are made whole. My proposal was modeled similar to FDIC insurance in the event of a bank collapse, which is essentially what happened — smaller accounts are made whole, and larger accounts are given a refund up to a certain cap.

It’s the best way to deploy resources to generate maximum societal good. In times of crisis, it’s imperative that we come together as a community and heal. It’s the best way forward, both in terms of restitution and potential for future development in all manners of the word.


Your proposal turned you into something of a Terra celebrity because of its emphasis on the little guy. You’ve blown up on the forums and now on Twitter. How have the last few days been for you? How do you feel about all of this attention?

I actually made the Twitter account specifically for this because someone on Agora [the Terra Research Forums] randomly suggested I should. It happened to blow up, which is pretty cool.

Believe it or not, I don’t want fame or recognition. People in the Discord keep calling me a hero, which is incredibly flattering, but I truly think I’m just doing and saying what any reasonable person would. I think at a time when everyone, especially the whales, are fighting hard for their own interests and bags, it’s important that someone speaks clearly and truthfully about what’s right and what’s just.

I would be lying if I said the last few days have been stressful — while it’s tiring to keep up with all of this, helping the community come together and work towards a solution is incredibly energizing. I’m constantly getting thanks and words of encouragement which is very gratifying, because helping people is what I sought out to do, and it’s a constant reminder that things are working. Of course, I couldn’t have done anything at all without the community, and it’s only thanks to them that my proposal reached LFG’s ears and got approved (albeit in a rudimentary form).


I wanna touch on that… Do Kwon doesn’t seem to have even acknowledged your proposal, nor any proposal which puts retail investors first – nor makes a good-faith attempt to refund lost $UST. Why do you think that is? What do you think it says about Terra and its future?

Do Kwon is probably about to be hit with a barrage of lawsuits. His in-house counsel has abandoned him. It might be a legal liability thing where he doesn’t want to accept responsibility. He seems to be as egoistic as ever — he hasn’t issued any proper apologies, hasn’t attempted to get in touch with real victims, and hasn’t discussed proposals on Agora except his own. He told people to ‘stay strong’ causing millions in losses as retail investors held on tight despite knowing his plan would never work, all while executing OTC UST trades for large funds. The last few days have proven that he is willing to sacrifice whatever and whoever it takes to save his own bags as well as the bags of his whale friends.

That being said, I think the new Terra chain has a bright future — it has some amazing builders and apps — it will just have to get rid of the reputational stain that Do has left on the way out the door.


As you said, Do Kwon has focused on his own proposals. I’m curious to get your impressions and thoughts about his latest one, the fork proposal. I know that members of the community consider it to be pretty bad, in spite of all the support coming from major protocols. What are your thoughts?

In general, I think the proposal is bad for a few reasons. I also understand that there’s little else Do can do. He’s been backed into a corner and it’s time to save face.

Firstly, the distribution model is a little off. He recognizes the issue with LUNA’s big crash and post-attack pickup, so he accounts for both pre-attack holders (whales and VCs) as well as people who bought LUNA after the fact for pennies on the dollar (IMO, this group has received way too much of the new chain’s allocation). But for UST, it’s all going to current holders, and pre-attack holders who panic sold at a loss are being ignored. It’s a weird double standard and it reeks of a half-baked proposal that wasn’t fully thought out or balanced properly.

Secondly, the spirit behind the proposal is pretty half-hearted. It’s not a real solution to anything and it’s not really what people want. UST holders just want the dollar they were promised, not another speculative coin to gamble on, especially one that’s vested. He has essentially left everything in the community’s hands and is stepping away from the project, which, to be fair, is probably the best choice, but it also gives the impression that he wants to leave all of this behind so he can go enjoy his money on a tropical beach.

Overall, I think it’s a way for Do to look like he’s doing something meaningful for the community while also handing a little bit of kickback to his victims in the form of a token that will no doubt have a good chunk of value from VC speculators down the road.


In your eyes, will this proposal pass? If it does, what do you think will happen?

The proposal will probably pass as TFL has a lot of sway with validators and governance token holders. The community vote we saw doesn’t really matter because whales could not care less about community consensus. The distribution model is pretty flawed, but I honestly believe the new chain has a pretty optimistic future — the builders are extremely talented and TFL won’t be sucking out millions out of the ecosystem with a black box of magical expenses.

They will have to come up with a powerful business model if they want to capture a similar amount of value as the original chain, but even without one, the apps that will stay are robust. Some of the cooler projects like Stader have already left to other chains, but the infrastructure that remains definitely has value. Personally, I don’t think the new chain should be saddled with TFL debts it should be its own thing. I would also recommend a rebrand because I feel like the Terra name is permanently tainted.


You’ve said that Do Kwon and the Luna Foundation Guard exited a large portion of their positions. I’m curious to know: do you think that the LFG and Do Kwon helped privileged members of the ecosystem, such as whales, exit at the expense of retail?

We already know for a fact that while Do Kwon was telling LUNAtics to ‘stay strong’ on Twitter he was letting whales dump massive tranches of LUNA into his Bitcoin reserves. While he told people a repegging plan was in place (he claimed he was going to collateralize UST, which never happened), he was executing huge UST sales, possibly for his buddies who wanted to exit high. The reserves were left with almost nothing, and now that pittance is being given out to the victims who lost their savings in this crash. How kind.

A big percentage of people I have spoken to said that they were ready to sell at $0.70 or $0.60 as the depeg intensified, but held on solely because of Do Kwon’s misleading tweets and are now left with $0.08. In my opinion, this is a clear cut case of market manipulation and it exacerbated the massive wealth transfer from retail to whales that happened over the last week.

TFL has done a lot of shady business, and the pile just keeps growing the more you look into it. Why does a 70-person company need $300m for a month’s expenses? I don’t think we will get concrete answers to any of these burning questions without a criminal investigation or an insolvency hearing. Someone has to drag these people to justice, because if it were up to them, they would say SFYL and not explain a damn thing.

The public deserves expense reports and the public deserves detailed logs of who all of the bitcoins were sold to as well as their preferential relationship with TFL. All of this money was taken directly from the pocket of LUNA and UST holders.


We reached out to the Luna Foundation Guard’s communication and press email to request comment on FatMan’s interview. As part of that, we also invited any member of the LFG, especially Do Kwon, the platform to respond in The Litepaper sometime this week or next week. 

At of the time of publication (May 18, 2022 at 8:30pm ET), the Luna Foundation Guard had not responded to our request for comment. If they do, we will prominently include their comment here and in the most immediate newsletter that we can.

Do Kwon’s “updated and final” revival plan proposal is now being put to a governance vote, which will conclude in six days. As of this writing, a quorum had not been reached. However, 86.7% of validators had voted in favor of Do Kwon’s plan.