Everyone Can Call Itself Stablecoin... The REAL Diversification

1 mo
LeoFinance
3 Min Read
666 words

Now, I don't want to call out anyone, but the lesson with Terra Luna is learned... And in this post, I would like to point out 2 important things that I have learned from it...

The first one is that if someone calls itself a stablecoin, it doesn't mean that it is! The same goes with ANYthing that someone states for itself... We saw a lot of examples of "Bitcoin and Ethereum killers" among very popular cryptocurrencies out there... When I had a company, I learned to pick words when I do advertising... You can't state that you are the best, as it's false marketing... You can't prove that you are the best, as well as others can't prove you aren't... In the end, it all finishes like bragging and it works in a short term sometimes, but in a long term doesn't... In the long term, actions, functionality, stability, and sustainability work... Not bragging...


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The thing with UST was a bit more serious as they have called themselves a stablecoin... I was joking with @achim03 about how our Liotes (LEN) token is more stable than UST, but we still don't call ourselves stablecoin... We have mechanisms implemented in our token to keep it stable, but we are aware that the price can fluctuate...

I suppose that the main problem is with the strong narratives that we are having lately in many different aspects... I have already mentioned some of the "magic words" that are "deployed" through mainstream media to, literally, hypnotize you to do something... For example, covid experts (as they are experts, you have to obey), discover the new... (you are going for a journey by buying a perfume, or a car, or a shampoo... you are important discoverer! Christopher Shampoonus! lol), and many others... Try to pay more attention and you will notice many others...

The same thing was with the UST tokens... If you call them a stablecoin, you will be faster adopted... If you add on that juicy staking rewards, you have a winner! But, in a nutshell, it was just false advertising...


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Another important thing that I learned is diversification... I know I was talking about it before, but I got even more aware of the REAL diversification after this LUNA debacle... People who were holding LUNA and UST thought that they have a diversified portfolio! The main problem here was that we saw complete destruction of a protocol that was in the Top 10 coins in the crypto markets!

Being a protocol, LUNA has pulled down many other tokens and apps created for it! So, even if you didn't have LUNA, but you had an investment in some other token connected in the same ecosystem, you have paid the price! So, you didn't diversify your portfolio well enough...

That thought led me to HIVE and our HIVE-ENGINE tokens... I know that we are completely different stories, but we have to implement critical thinking in our case, too... If HIVE goes down the drain, your HBD will go with it, too... Also, most of the Hive-engine tokens will do the same... Even if you have 50 different tokens in the HIVE ecosystem, they are still in the SAME ecosystem... And you didn't do well on your diversification homework...

So, next time when you are doing diversification or rescaling your portfolio, think about different blockchain networks, different protocols, and different niches... In that way, you can be more "protected" from similar future events that could (and probably will) happen!

Thank you for your valuable time,

~ph~

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I think diversification and that is why I do plan on building my portfolios outside of Hive when I grow big enough. I just don't think relying on just Hive (even if I don't think it will ever go to zero) is the only system out there.

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3

Yup... We shouldn't be HIVE maximalists, as it's the same bad as being any other maxi... Ignoring the world outside the bubble was never a good idea...

!WINE

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0

Pretty much agree with you have said...
It's actually very frustrating for those who has invested a lot of money in Luna.
Diversifying the money one can afford to lose.

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1

Unfortunately, many people lost a lot... This should be a valuable lesson to not invest all in one basket, and not invest all your savings in the new shiny thing...

!PIZZA

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1

Yes...

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0
1 mo (edited)

PIZZA! PIZZA! PIZZA!

PIZZA Holders sent $PIZZA tips in this post's comments:
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0

Great points. The speed of the collapse was amazing. Those with funds locked were helpless observers.
My thoughts are that money doesn't die or go to money heaven, so where did it go in this case?
Who took the money from Luna bagholders?

2

There were definitely market manipulations, but it's uncertain who really started and of course, who took the most of the "loot"...

!LUV

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0

Since it's already happened, I do hope these are good lessons and all of us in the community will be able to learn and improve on our strategies going forward. :)

1

Oh, it's happened... And it's happened many times in the past, but this time had a huge impact... I do hope that we will learn a lesson from it!

!PIZZA

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2

The danger of being so much imerged in the Hive ecosystem is that we have the false belief that we have tons of different tokens and are well diversified. But you point out a very important point. One shouldn't put all eggs on one signle blockchain because you never know what can happen....

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being so much imerged in the Hive ecosystem is that we have the false belief that we have tons of different token

That's always the same story... Like having friends on Facebook, or being in one Discord channel... Creating a bubble, or even a cult, gives you a false image of the reality... This was an ugly reminder about that...

!LUV

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1 mo

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1

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0

I'm more of a "the quality will speak for itself" when it comes to adds and I begin to distrust products/services when adds are promising too much. Keep it simple.

1

Huh... I do agree with you, but the reality is completely the opposite... As a matter of fact, even our REALITY is FAKE... lol... That's a twist... lol...

!LUV

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1

As a matter of fact, even our REALITY is FAKE... lol... That's a twist... lol...

!LOL I know what you mean. That situation I've described is in reality a utopia.

1

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1 mo (edited)

I do agree it isn't a great idea to be ultra-focused. At the same time, I don't see with good eyes too much diversification either, because you simply don't have time to watch those projects and how they are doing. I did almost no real research on LUNA and UST when I invested a little bit in them when they were added to the Cosmos ecosystem. I was just happy a "real" (as in big) stablecoin made its way to that ecosystem. I built up my Cosmos portfolio from a very small investment, mainly from LP and staking rewards and airdrops, and on semi auto-pilot. I've actually bought CRO for my current tier on Crypto.com card using funds from there (4000 USD at the time), so it more than paid off the investment. But if you ask me for specifics about any of the projects I have put some funds into on Cosmos, I don't know much. I simply wouldn't have time to track them down or the will to do it. My focus is elsewhere.

How do you manage investments in multiple protocols and even more projects and feel satisfied you are on top of things? Let's say you make the initial research when you invest. They make proposals, upgrades, etc. and in theory, you have to be at least aware of the most important of them, plus take action accordingly in some cases. On Cosmos, at least, there is/was a frenzy of them (+airdrops and their conditions), and not even JK who was quite focused on Cosmos knew all of them.

1

Cosmos is one of the protocols which I didn't research at all... Lately, I was poking around Polygon, Fantom, and Avalanche, but the main focus is on the first one... Of course, because of the Polycub... But, in any of those L1 tokens themselves, I didn't invest too much... I have a couple of tokens to have for transaction fees, but I didn't go into them as I did for ETH or HIVE... On the other side, I did use Defi websites that are using their networks... Mostly stablecoins and blue-chip tokens...

How do you manage investments in multiple protocols and even more projects and feel satisfied you are on top of things?

This is a tough one... Tbh, I have a problem with the research thing + time that passes by... Most of the time, as I'm longer into some protocol, defi project, etc, I learn more and more things... And then I realize that I have dug out certain things that aren't that good about it... lol... Unfortunately, it happens very often, but it's a good "stress test" for the emotional side and trying to go over it... To get out from it while I can... I was late with LUNA as it was too much FOMO and I found ZERO critical thinking about it... That's the main problem...

On HIVE, it's a bit different, I can research certain tokens, exchange opinions with others, "read" the tokenomics easier, and even find some shady things before others... This sucks as you get disappointed, but it's good as you stop losing money... :)

!PIZZA
!LUV

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1

I didn't go into Fantom or Avalanche yet and probably won't during the bear market. In a way, these were also hyped up when the bull market sentiment was still high, as was Solana. From what I heard, Solana isn't feeling very well, with the blockchain freezing a couple of times.

The hype for Terra was very high, that's true. Where I got my bearings wrong is that I was looking for alternatives to USDT, and the algo-stabilecoin marketing of UST was familiar, plus it was the only big stablecoin (until it wasn't) in the Cosmos ecosystem. Quite a few things to go wrong, as it turns out, but at least I didn't go big at all on UST or LUNA.

1