Crypto Updates - Down the rabbit hole

I probably got burnt in my crypto speculation as my holdings are down around 30% at the moment. When the crypto prices came down from the peak, I though it would be a good time to start entering, but I did not expect it to be a drop of 50% kind of crash. I have already split my capital into multiple tranches and average down during the crash but it was not enough to buy all the way down. As the prices remain low and did not rebound much, I am still holding to quite a large unrealized loss.

When I started to speculate into crypto, I was prepared to lose all the money and I set a cap to my capital that I will be putting in. As I have already max out my capital for crypto and do not want to inject anymore money, I decided to go all in by borrowing more capital from DeFi.

Here comes collateral borrowing to the rescue. As I am already waist deep and prepared to lose all my capital, I dived into collateral borrowing from DeFi. In the crypto world, it is extremely easy to borrow as there are no checks and anonymous. I am using Venus DeFi as most of my cryptos are on Binance Smart Chain. There are other platforms for other blockchains.

The platform allows user to deposit cryptos as collateral and borrow up to 80% of the supplied cryptos. If the borrowed amount exceeded the collateral factor, then those cyptos the user supplied as collateral will be liquidated. There is no interest to borrow via minting their ‘stable’ coin and there is no time limit when to return the borrowed cryptos. With collateral borrowing, the maximum loss I will incur is the amount I supplied as collateral which I am prepared for.

Having said that, Venus DeFi is not risk free, and in fact, the risk is pretty high. Their governance token price was manipulated and exploited which resulted in millions of bad debts and triggering a mass liquidation event. Their so-called stable coin has also lost the peg to USD and is down around 10% of a Dollar.

I accepted the risk as it is easy for me to borrow, and moved some of the crypto that I am HODLing into Venus DeFi as collateral. I borrowed only 60% of the crypto I supplied in order to have some buffer so liquidation will not be triggered so easily.

With the new additional borrowed money, I can now continue to average down.

Go big or go home. Not a financial advise.