Tuesday 10 May 2022

I got liquidated and lost my whole LUNA position | Anchor Borrow

My LUNA position

I do hold a substantial amount of LUNA in my portfolio in relative size to my portfolio value although it is about 4 digits amount which might seem small to some. LUNA is my 3rd largest holding after ETH and BTC. My borrowed value was about USD4000 and collateralized value was about USD6000 or USD5000 (based on rough memory, not exact as price flutuates) as LUNA has been dropping substantially recently. So my LTV is actually pretty safe I would say, I had a liquidation price of $43 and didn’t really think that LUNA would drop that low although there were some warning signs the day before.

Events leading to my liquidation

On 8 May 2022, there was a huge amount of UST withdrawn from Anchor Protocol as well as on Curve.

This was in hindsight a warning but I decided to brush it away and just left my liquidation price at $43. I understand the basics of whole system and I have also explored the different ecosystems or protocols of Terra ecosystem. I find it a relatively easy to use and cheaper than the Ethereum chain. I do believe as more protocols are being set up to slowly take the UST reliance away from Anchor Protocol, Terra can become a really good entry point for crypto natives.

Crypto is a place where sentiments can change fast and people can lose trust in products once it de-pegs or loses them money. I have to admit that losing my bag of LUNA has been painful although I can recover it over the next few months. I wasn’t really expecting this but I guess the market has taught me a lesson, this is my only leveraged position and all my other crypto like BTC, ETH and smaller positions like SOL are all spot so I don’t feel anxious as prices drop, just continuing my DCA.

Read more: https://www.coindesk.com/markets/2022/05/09/investors-flee-terras-anchor-as-ust-stablecoin-repeatedly-loses-1-peg/

My UST position is a low 4 digit as I have been slowly deploying it to buy the dip although it has been dipping like no end. So on that part, the de-pegging is not as painful as losing my LUNA bag but I feel sad that the Terra ecosystem is facing such a hurdle at a time when things aren’t as good either where BTC which LFG bought as a reserve currency or as a backing is also not doing that well as BTC has also experienced a substantial drop.

Lessons Learnt

I think many lessons learned here for me.

  • Split your holdings up if possible

A few days back, I was actually planning to redeem all my LUNA out and to just stake it or earn yield on it, it would have protected some of my capital and not caused a full liquidation on my side. Over the past months, I have considered redeeming half and have half placed somewhere else to earn yields but eventually just decided to leave them in Anchor Borrow.

I think it would have been better if I had split my holdings up and at least be able to secure a portion and not have to lose my holdings.

  • Be agile and keep up to news (could be good or bad depending on how you react)

The crypto markets move and react fast to news. It might have already been a warning when there were huge withdrawals being seen on Anchor Protocol and Curve Finance. But for me, I usually choose to do nothing as of course, things could work the other way although no harm would have been done if I did redeem some of my holdings. Reacting too fast to news might not always be great but securing your positions and making sure you are “safe” is important too.

  • Don’t leverage your whole position and take profits when you can.

I leveraged my LUNA position when LUNA was in a great position and should have redeemed or sell some for profits. As I have mentioned before, I do have this difficulty of pressing the sell button as I always feel that it can go higher. I really do need to learn when to take profit especially so when the markets are at a euphoria.

What am I doing next?

Will I be accumulating more LUNA? For now, I will just DCA into ETH and BTC as I recover from the shock I experienced from being liquidated. I have to say that I enjoyed using the Terra ecosystem from NFTs to LP and to seeing so many new projects coming out eg self-repaying loans. Hoping that people who have also lost money recover and move forward. I think this has really humbled me and made me a few steps backwards towards my first $100,000 in investments. Wow, what a day it was, still early in the day but I feel like I just experienced a whole day in a morning! Not gonna make a video for this so if you want to help me slightly recoup my losses, you know what to do, I am kidding 😉 WAGMI!

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  1. Sorry to hear. Luckily you still have your btc and eth bags, HODL.

    1. Hi, yea, I am now building it back up and to be honest after experiencing this, I do feel a little afraid to have too big a bag in crypto. Thanks!

  2. Sorry to hear that. Hope you recover from this and reach 100k soon

    1. Thank you, not a huge amt lost as compared to the many others but much to learn from this and I hope that this has made me a smarter investor. Onwards to 100K:)

  3. Are you single?