There will likely be a lot of posts regarding the current conditions in Terra chain. I will write a little about the current stress I am in and how badly I underestimated the Luna draw down.
There is no technical analysis for this chart above. Price drop is to all time new lows for UST which lost peg from the US dollar since last May. Within 24 hours from first signs of weakness in loss of peg right now UST is significant lower.
This has led to Anchor massive draw down as FUD is spreading.
Less than 10 billion total value locked on Anchor when just three to four days ago it was close to 18 billion. The drop in value of Luna did not help.
Terra currently hit a daily low of $27 while for now bounced off to $37. Rather than talk about how or why this is happening I will talk about my own dilemma.
Edge Borrowing and Lending
My borrowing on Edge protocol currently over the safe zone but manageable. So that is what I thought. In a matter of minutes, not days, the value of Luna dropping hurt my risk ratio and it basically went into 98% to liquidation.
I had to sell assets to provide more collateral and protect from liquidation. The struggles begin here. Trying to withdraw from one protocol to another lead to a lot of slow down on Terra chain. In fact swapping between tokens took minutes rather than the usual seconds as I believe many people were trying to maintain their collateral from liquidation.
An example of how bad the liquidations are going is the Kujira bids that hold up bLUNA price basically were all bought up while Luna was free falling. With that chaos Luna basically crashed through the threshold and within minutes I was left with almost no collateral.
Now there is a slight bounce off Luna since it is well below the highs at a meager $37. Yet what will it take for it to sustain these levels? Instead there is more potential for it to fall off $37 and lower creating the same headache I am having as in lack of collateral.
The consequences of using collateral is here to stay but lesson learned is not to over borrow. I am wasting time, energy, and selling assets under value in order to obtain the liquidity to pay off the debts which is not an effective way to earning income. This is a lesson learned the hard way. I am personally going to reduce my collateral seeing how quickly even a blue chip cryto like Luna can fall in price so quickly. No investment is safe.
None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!
LeoFinance = Financial Blog
LeoDex = Hive trading exchange for Secondary Tokens, Low 0.25% fees for deposits and withdraws.
HiveStats = Hive stats per user
LeoPedia = Informative content related to anything about Crypto and how to make financial gains in crypto!
CubDefi = LEO Finance's Defi with CUB Token