Some reflections about my own Anchor Protocol journey:
I started using Anchor Protocol in September last year.
Initially, I was very skeptical. 20% APY sounded too good to be true.
My long-term background is from equities, and 10-15% APY is counted as a good year in the stock market.
Initially, I was very skeptical. 20% APY sounded too good to be true.
My long-term background is from equities, and 10-15% APY is counted as a good year in the stock market.
I've written some threads about Anchor, and I've tried to list all the associated risks (de-peg, smart contract, algo-stable, etc.).
I think what convinced me to try this out was the enormous backing of Anchor & Terra (Hashed, Jump, Delphi, 3AC) + the fact that Anchor...
I think what convinced me to try this out was the enormous backing of Anchor & Terra (Hashed, Jump, Delphi, 3AC) + the fact that Anchor...
"produced yield" (well sort of with the staking rewards and the collateral...). At the time I got in the "self-produced yield was around 12-15%.
So how could they pay out 20% APY? The yield reserve. And I think this was the convincing part from my side.
My thesis was that as...
So how could they pay out 20% APY? The yield reserve. And I think this was the convincing part from my side.
My thesis was that as...
long as there was a positive yield reserve, Anchor would cover the 20% to all depositors.
Other pros with Terra were nice UX/UI, the collateral backing (in retrospect it wasn't good), lots of talented devs and gigabrains, a big community, and so on.
Other pros with Terra were nice UX/UI, the collateral backing (in retrospect it wasn't good), lots of talented devs and gigabrains, a big community, and so on.
Okay, so this was September. The bull market is back on. I'm taking some profits in part 2 of this bull run, and Anchor is my preferred platform for storing my stables. After all, the rate was reliable, right? ... β οΈ
Fast forward to January this year, Anchor has grown tremendously and some critics are starting to write threads about why Anchor and $LUNA will fail.
I remember I was impressed by the thoughts of @0xHamz. It wasn't popular among the Lunatics when I saluted him in a thread for
I remember I was impressed by the thoughts of @0xHamz. It wasn't popular among the Lunatics when I saluted him in a thread for
challenging the Terra-system and some even told me that I wasn't welcome as a Lunatic and that I was a cockroach.
I started to read mostly everything from critics (Freddie, Algod, DUO9, Galois, GCR, Luna Short Bets++
We're now in February, and the yield reserve is almost zero.
I started to read mostly everything from critics (Freddie, Algod, DUO9, Galois, GCR, Luna Short Bets++
We're now in February, and the yield reserve is almost zero.
I'm starting to get a little worried because there's no communication about a refill.
The worst-case scenario would be a bank run.
At this point, the Anchor deposits are $5b.
Eventually, the news about the refill is out and the deposits are growing fast.
The worst-case scenario would be a bank run.
At this point, the Anchor deposits are $5b.
Eventually, the news about the refill is out and the deposits are growing fast.
Anchor is paying out $1.5M per day at this point.
Fast forward to the end of April, and there's $7M going out daily to cover the $14B deposits.
The worrying part is that the borrowing side is almost unchanged, in other words a huge imbalance in the system.
Fast forward to the end of April, and there's $7M going out daily to cover the $14B deposits.
The worrying part is that the borrowing side is almost unchanged, in other words a huge imbalance in the system.
Still, I'm thinking to myself that it makes sense to stay in Anchor as long as the yield reserve is positive. Too big to fail, right?
I wrote this in my newsletter at the end of April:
" They're paying out $1.53b more per year than they can cover at the moment.
You might...
I wrote this in my newsletter at the end of April:
" They're paying out $1.53b more per year than they can cover at the moment.
You might...
already think: βHow can this be sustainable?β
It isnβt.
And Anchor themselves also know that.
The real market rate would be approx. 6.7% APY ($804.8M/$12B)
The only reason why the interest rate is still 19.5% (and not 6.7%) is because of the yield reserve."
It isnβt.
And Anchor themselves also know that.
The real market rate would be approx. 6.7% APY ($804.8M/$12B)
The only reason why the interest rate is still 19.5% (and not 6.7%) is because of the yield reserve."
I'm on the defense, but yet I'm still using Anchor
By the end of April the stock market is getting close to a bear market, and I've sold off some of my stocks from and put more money into Anchor.
At this point, I have close to 7 figs in Anchor and my GF has $150K.
By the end of April the stock market is getting close to a bear market, and I've sold off some of my stocks from and put more money into Anchor.
At this point, I have close to 7 figs in Anchor and my GF has $150K.
A little bit more than I'm comfortable with.
I know I have to do something, and I decide that the best thing we can do is to spread out some money in $BTC and $ETH.
We're now in early May and another thing happens.
You see, the equity markets are collapsing, and as...
I know I have to do something, and I decide that the best thing we can do is to spread out some money in $BTC and $ETH.
We're now in early May and another thing happens.
You see, the equity markets are collapsing, and as...
a consequence USD/NOK (forex market) is booming
I live in Norway, that's why this is relevant to me. An 11% increase in 1 month is not normal, and I decide that the most +EV bet is to take profits on everything we have to fiat (NOK) temporarily, and then hope that USD/NOK will
I live in Norway, that's why this is relevant to me. An 11% increase in 1 month is not normal, and I decide that the most +EV bet is to take profits on everything we have to fiat (NOK) temporarily, and then hope that USD/NOK will
go lower again. (spoiler: it didn't so far, USD/NOK is even higher now). However, I'm happy at this point because of an extra 11% on my Anchor money compared to the month before.
You can read more about my thought process behind this here:
getrevue.co
You can read more about my thought process behind this here:
getrevue.co
My plan was to get back into Anchor again when there was more clarification about a new refill of the yield reserve, but then all of these wild things start to happen with Anchor.
A $2b withdrawal in Anchor deposits and a depeg to 0.985. I've covered it all on Twitter.
A $2b withdrawal in Anchor deposits and a depeg to 0.985. I've covered it all on Twitter.
What did I lose? So while I did not lose anything in my Anchor wallets, I had staked $LUNA that I couldn't do much about...but it wasn't that much so overall I was pretty lucky through this whole thing.
All this week I've felt pretty ashamed because I didn't lose that much compared to other people who were more or less all in. Especially since I've written so much about Anchor. And even if it's DYOR, I feel responsible that people read about Anchor because of me.
So this week I've spent all my time answering DM's from people, and doing free video calls with people to get out of Anchor. I'm sorry that I couldn't answer all of you. It feels bad that people have lost money based on my writings. Even if I hate the word influencer, my...
follower count has grown a lot, and there's no doubt that I've influenced some of you.
People that have followed me for a while have probably seen that I've become more and more skeptic about most things in DeFi.
Going forward I'm not sure how to do it.
People that have followed me for a while have probably seen that I've become more and more skeptic about most things in DeFi.
Going forward I'm not sure how to do it.
I still love DeFi, and I'll focus on sharing even more about risks going forward.
Btw, I've doxxed my wallet to Terra developer @javiermendonca and @cryptrus (in case someone doesn't believe the story).
And why do I share this at all? Because so many have asked for it.
Btw, I've doxxed my wallet to Terra developer @javiermendonca and @cryptrus (in case someone doesn't believe the story).
And why do I share this at all? Because so many have asked for it.
Some lessons:
-I had more than 15% of my portfolio in Anchor in the end. So I broke my own rule about max of 15% in a protocol.
-I was extremely lucky this time
-Listen to skeptics to form your thesis, don't get into a maxi mindset
-Most DeFi is super risky, going forward...
-I had more than 15% of my portfolio in Anchor in the end. So I broke my own rule about max of 15% in a protocol.
-I was extremely lucky this time
-Listen to skeptics to form your thesis, don't get into a maxi mindset
-Most DeFi is super risky, going forward...
I'll be even more careful about what I put my money in.
-Never lock up your money in a DeFi protocol. If you do, understand that the tokens might become worthless
-Get away from echo chambers, this is probably the worst thing you can expose yourself too
-Never lock up your money in a DeFi protocol. If you do, understand that the tokens might become worthless
-Get away from echo chambers, this is probably the worst thing you can expose yourself too
I think the biggest lesson we can make from the last week is that no coin is too big to fail and to never have your full net worth in one ecosystem.
Crypto is risky. In the end, it's all about survival. Preservation of capital comes first.
Crypto is risky. In the end, it's all about survival. Preservation of capital comes first.
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