Reflecting on the collapse of UST and LUNA

511 is a tough day for investors (supporters) in the Terra ecosystem, and a day worthy of being recorded in the history of the Canadian currency.

On May 9th, I was thinking about joking with my friends that "519" didn't know what would happen. Because the 519 bloodbath in 2021 is a time point that has been remembered by "insiders" at least recently, but with the subsequent market price of 68,000 on Bitcoin, everyone gradually forgot about it. It always feels that the "bear" is still far away from us.

From 511 to today, I always wanted to write something and record something, but I didn't want to sort out my thoughts.

So today I decided to write about investing in the Terra ecosystem.

Terra (Luna) is an ecological currency that I have studied more seriously after stepping out of BTC and ETH. In the past, I used a holder mentality to store Bitcoin BTC and Ethereum ETH. Because of the topic of Web3, I re-focused on the trend of researching blockchain, and I also started to write my own notes and analysis.

Regarding investment, everyone's imagination of return, of course, hopes that the higher the better. Ten times, a hundred times or even a thousand times, but the fact is that not so many people have the patience to wait for their ideal price to get out. Of course, some people's investment thinking is to hope to get rich overnight. Therefore, the projects you follow may often encounter the so-called "local dog" plate or "pixiu" plate.

For Canadian currency investment, I have always expected a long-term participation process, so I use the perspective of "angel investors" or "venture capital" to look at each project. Also try to let yourself learn not to FOMO because of the turmoil in the market, and play steadily.

In the flourishing Canadian currency ecosystem, Terra was chosen as a promising investment target, but a small amount of tests were also performed on the status and process (transaction process) of each ecosystem.

In my heart, I think the most optimistic is LUNA. Just a few days ago, my friend's JUNO was a little nervous because it kept falling. At that time, I told him that if I was really afraid, then I think LUNA should be the most stable ecology. As a result, he was severely beaten in the face every two days.

Since it is a reversal, let’s talk about the reasons for optimism and investment in LUNA

The first should be the founder and the founding team. Investing is actually investing in people and investing in teams. This is a concept that I have always been very clear about working hard in the startup circle. A good founding team has the opportunity to turn a not-so-good project

It is done, but a team that is not good, even if you give him a good project, the probability of failure is very high.

Seeing the experience of Do and his partners, at least they feel that they have a certain level of experience and operation. The experience of e-commerce has a certain degree of success and imagination for the goals (or status?) that Terra wants to create in the future.

The second one should be considered low-key or less publicity. Compared with the volume of other ecosystems in the market, the publicity of the Terra ecosystem is relatively small. I feel that there is a chance to explode later, so I am willing to wait.

The third fee is reasonable. Compared with the Ethereum Noble Chain, Terra's fees are relatively reasonable transaction costs.

The fourth stablecoin system has its own stablecoins, which can be traded in their own wallets or decentralized exchanges (DEXs) through stablecoins. It is convenient to deposit and exchange currency.

The fifth is a member of the Cosmos ecosystem

These are several reasons why I was optimistic about LUNA and the entire ecosystem in my investment diary. But the irony is that the fourth important reason has become an important key to the collapse of the LUNA ecosystem.

Since it is an overwrite, let's look back at some of the situations in this operation.

In an exchange with a friend yesterday, he mentioned that when the UST has not returned to the 1 anchor, there should be a certain amount of vigilance at that time. For me, I will pay attention to LUNA, but UST will only pay attention to the current price when it wants to buy it, and will not pay much attention to whether it is lower than 1. This is something to watch out for in the future.

The second point is that for betting on stable coins, a single stable currency will hurt a lot of people in this ecosystem. USDT and UST are the two stable coins that I will mainly hold. USDT is mainly used for fiat currency exchange and transaction currency. Under its own configuration, UST is the emergency fund and capital reserve.

Before discussing with friends, some AA system fees can be traded with UST. Increase the usage scenarios of UST. In fact, there is another project in the Luna ecosystem, Kuji, which has a function, which makes me think that UST can better implement the implementation in the cryptocurrency world. It is the function of reserving batch transfers. The above is a very good function, and I originally planned to conduct experiments and tests, because my friends and companies use Bitcoin as the salary currency, and some friends use USDT as the payment. Unfortunately, before that day, UST was sniped.

Overhaul: asset allocation adjustment of stablecoins, adding USDC to individual portfolios and paying attention to stablecoin portfolios in 3Pool ( 3pool - Curve.fi ).

The third point is to adjust the blue-chip layout of your investment portfolio. Although this time, because you need to test interesting projects, so you will spread the funds on different projects to avoid some losses by accident, but this incident also allows me to determine for myself Portfolio risk management should be done well. The other is the layout of POW and POS. In fact, from the standpoint of supporting the ecology (long-term investment), the pledge of the POS mechanism is a good means, which can earn interest income and support the community to make long-term investment. But the risk is that when an emergency happens (such as the LUNA incident), there is nowhere to run if you want to. Therefore, we will still look for suitable reserve projects to convert future income into reserves for value preservation or stable long-term holding.

Fourth, there is awareness of risk management, but no experience in risk management . Although the LUNA incident is a kind of black swan incident, I am still too shallow on the operation and judgment of risk management in this incident, and I need to consciously cultivate this part of the ability in the future.

In 2014, I knew about Bitcoin for the first time. In the middle of 2017, I was actually watching everyone play by the pool. In 2021, I really walked into the pool and felt the temperature of the water. I didn’t experience a cycle (bear-bull or bull-bear alternation) and I couldn’t accumulate wealth once. This is the cycle and trend of investment, and the market will eventually return to a state of calm. There is hope in life, and opportunities for growth in learning.

Looking at LUNA a few days ago with the mentality of fixed votes, I feel that when LUNA is down to 30, it really feels like a big auction. In fact, about the beginning of the month, I started to feel that the bear market was approaching, and I adjusted the position (but according to the actual operation method, it is possible to escape to the UST even if it is safe, so it is still a feeling of the same destination), but I did not expect that he really jumped all the way to the basement.

Back to the ecological management, I still have a chance to succeed in Terra's direction and ecosystem layout, but how to regain the confidence and consensus in the market is a problem that the Terra team has to solve. This road should be long, and How to not die first is a direction worth watching in the coming week.

In the future, when I collect more information, or if I improve my financial knowledge, I may be able to watch Luna's class again, and maybe I can understand the layout and operation of financial sniper operators.

It feels like in just a few short days, this event could be made into a movie.

It can only be said that there is hope in life, and cryptocurrency is an environment for rapid verification and rapid trial and error. Both Bitcoin and Ethereum have survived the baptism of major events. It's up to the Luna team to wrap up, no matter what the outcome, this is a good textbook.

You must know that you are afraid of the market, there is nothing that will never happen, even if it is only one in ten million. Do a good job in risk management and do a good job in position control.

Another point that I think can be observed is the economic system of South Korea. Another part of Terra’s success was that he has an application similar to LINE PAY in South Korea. The underlying settlement mechanism is based on UST and KRT for settlement, allowing merchants Users can use blockchain and cryptocurrencies painlessly. In the lower part of the line, I don't know what kind of benefits it will bring.

Butterfly effect means that in a dynamic system, a small change in initial conditions will drive a long-term and huge chain reaction of the entire system, which is a chaotic phenomenon. The "butterfly effect" also occurs frequently in chaos.

In the past two days, many people have watched Terra's house on fire, with the mentality of watching the show, but they ignored that their holdings were also shrinking, just like seeing netizens sharing in a certain group, watching the fun and watching was very enjoyable, and then looked back. His SOL also fell by more than 40%. There is a sense of seeing someone else's house on fire to join in the fun, but turning around to find that there has been a thief in your own home.

Every major event has led to some reforms and growth in the cryptocurrency circle. If we want to talk about the impact of this event on the entire cryptocurrency circle, I think it is possible that the US government or the governments of various countries will begin to impose regulations. Relevant measures, as well as the possibility of accelerating the development of digital currency in various countries.

Here are a few points that I would like to observe in the future.