This M’sian Lost All His Savings In The LUNA Crash…But Still Believes In Crypto

We are admittedly no investment and cryptocurrency experts, but the ripple that rippled across the world during the recent Terra/Luna crash was hard to ignore. TLDR; cryptocurrencies Terra (UST) and Luna (LUNA) crashed overnight by around 98%, falling below $1. Some investors had poured their savings into the coin, leaving many with nothing:

We won’t go into the details of how stablecoins like Terra/Luna work (for that see here and here), but we wanted to get a better idea of ​​the situation, so we reached out to two crypto investors/NFT creators. The first is Nova (not her real name; named after the giant cat that belongs to DOTA 2 hero Luna), who, like many, lost virtually everything in the crash. The second is David Yeo, who avoided the same fate since he claims to have “saw it coming”.

Nova started buying stablecoins as blue chip coins became volatile

In normal parlance, the term blue chip (which comes from poker games, as blue chips have the highest value) basically means “well-established” or “financially sound”. In terms of cryptography, this usually refers to the established pieces like Bitcoin (BTC) and Ethereum (ETH). So when the big names started to fluctuate, Nova swapped them out for a algorithmic stablecoin (which are pegged to other assets, such as the US dollar or the euro). In the case of Terra, it was pegged to the US dollar and therefore said to be more “stable”, hence the name “stablecoin”.

At the time of MCO in 2020, Nova, an award-winning commercial photographer and successful full-time NFT artist, had already exhausted a large part of his savings to buy and rebuild his house. Being a relatively new and cautious crypto investor (he claims he only learned about staking in January 2022), the lure of a coin with the word “stable” was too hard to resist. It was also promising incredibly high yields, which appealed to him even more:

“UST offered almost 20% APY (annual percentage return) so I opted for that. “Why not, it’s a stable coin!” I was thinking.” – Nova

Oh, how wrong he was.

Not stones indeed. Image by: Data Driven Investor

Because you see, when Terra/Luna was expected to be the next big thing for crypto, critics drew attention to its susceptibility to market attacks. However, its South Korean founder Do Kwon had put too much faith in its creation, challenging internet billionaires to try and take him down. In fact, he was so arrogant that he even accepted a $11 million bet betting that Luna would trade at $88 next year.

Well, as Count Dooku said in Revenge of the Sith: “twice the pride, twice the fall”. And he fell, and hard.

Luna’s value suddenly plummeted and Nova found herself penniless

If there’s one thing we’ve learned over the years, it’s to never challenge the internet to do anything, because they will be do it. Shortly after Kwon issued his challenge, an unknown entity sold Terra for $285 million, which untied Terra from the US dollar, shorted Luna, and led to a sell-off of Luna by panicked holders. The dominoes continued to fall and, at the time of writing, Luna sits at $0.000201 (RM0.000880).

Sakit, brother. Image taken from: Yahoo! Finance/TradingView

With almost all of his wealth tied to crypto, Nova, like many others who bought Luna, ended up empty-handed, and practically out of money:

“Right now I don’t really want to think about it, otherwise I might get depressed and eat under stress (and I don’t have money to eat under stress). It’s already happening. too much else in real life before it even happens.- Nova

As for the Luna he still holds, Nova says he’s keeping it because he thinks there’s a chance the coin will recur to the dollar. Not that he can do much besides that anyway, since trading on Luna was suspended at the time of the interview.

David, our other crypto-brother interviewed, briefly summed up the whole Terra/Luna fiasco in two sentences:

“It was purely market manipulation by the 1%. And Do Kwon was an arrogant [email protected] who did not listen to the public. – David

(Note: Many, including South Korean authorities, believe that Terra/Luna may have been a Ponzi scheme due to the unsustainable returns offered. Do Kwon is currently under investigation in this regard.)

But where was David during all of this? Well, even though he thinks stablecoins can be extremely profitable, he completely avoided Luna as he had seen other projects that had followed the same trajectory as Terra due to their overreliance on the ankle. In other words, if X is good, Y is good; if X is trash, Y is trash, which means that it is very easily the victim of market manipulation:

“It happened to Forgiving’s 2omb, it happened to Harry Yeh’s Tomb, Devil Finance, Kitty Finance, Piggy Finance. Algorithmic stablecoins only work if people play well, but they are very susceptible to whale manipulation. One bad rich actor and it’s over. – David

But with all that said…

Nova and David are still confident in crypto

Yes, even after all of this, believe it or not, the two crypto brothers we spoke to still believe that crypto (or rather web3) is the way of the future. The two are looking to continue focusing on their crypto/NFT/web3 projects in the future:

“Buy. Historically, cryptos are volatile, but they’re always higher in value the following year (and I’ve looked into that aspect)…The NFT project I’m building right now has really big potential for growth. – Nova

“Fuck yes. As Gary Vee (entrepreneur) says, we are 3 years into a 45 year plan. This technology (web3) is gonna fucking change the world, man. The growth of Web3 is exponentially faster than the Internet has grown since its inception.-David

(Note: Web3 is a new idea for the internet based on blockchain technology; NFTs and crypto fall under Web3. Or, in David’s words: “if crypto is Pikachu, Web3 is Pokemon”. )

Image from: Data Analysis

However, both point out that any type of investment involves a certain degree of risk, and with crypto, says David, the main factor in its instability is that it is still a new technology subject to manipulation, as the Terra/Luna crash clearly demonstrated:

“It’s brand new, and it’s got a ton of bad actors and carpets. It’s too young for it to be in its infancy yet.”” – David

As for the overall lesson here, we think Nova provided the best for ending things:

“Do your own research, and my advice is: don’t buy sh*t coins. –Nova

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