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I've been in this game for years, it made me an animal
It's rules to this shit, I wrote me a manual
A step-by-step booklet for you to get
Your game on track, not your wig pushed back
- The Notorious B.I.G
Fate loves irony. The eternal wisdom of T.H.E. Biggie Smalls could have saved us from the successive controlled demolitions that have rocked crypto since this big year began.
Alas, it seems the false gods’ playlists are as trash as their risk management.
Number 4, I know you heard this before
Never get high on your own supply
Rummaging through the wreckage of the past year, it’s hard to unwind the ball of shrapnel that’s drained over 11 figs from the market.
But one thing is clear – we’ve been rolling drunk on leverage since The Great Brrr began.
For ordinary people, taking on debt has been a necessity in a macro climate where individuals are watching their spending power evaporate in real time. With global inflation soaring and JPow aggressively hiking, the average citizen is being squeezed harder than an Alameda stop hunt.
Rekt is an understatement.
This logic falls flat when considering the actions of crypto’s biggest actors.
Number 6, that goddamn credit? Dead it
You think a crackhead paying you back, shit forget it!
Successful CEX’s are, quite literally, free money printers. Similarly, multi-billion dollar hedge funds don’t need to do much to protect capital.
Neither have any logical reason to recklessly deploy customer funds and dial up leverage like Adderall-fueled zoomers trying to make it all back in one trade.
The fact that the market currently hinges on a <$1B fundraise is appalling. During 2021’s fever dream that figure was a drop in the ocean.
While everyone who’s blown up this year is crawling out of the woodwork to blame LUNA for causing the contagion, this is a mid-curve excuse.
Did the space’s “brightest” minds really fail to understand the protocol’s ponzinomics?
How did these firms become so invested that they were willing to risk their balance sheets?
Alright, which one of you actually had size?
7, this rule is so underrated
Keep your family and business completely separated
Sam. Bankman. Fried.
Little more can be written about the largest fraud this space has ever seen. In a not-so-shocking turn of events, the Chinese Wall between FTX and Alameda turned out to be little more than a sheet of single ply toilet paper.
Polycules and DNC/SEC ties aside, SBF’s greed has single handedly destroyed the industry faith that crypto natives have tirelessly cultivated for over a decade.
Yes, SBF dug a $10B hole trading customer funds and using illiquid shitcoins as collateral.
Yes, SBF set the industry back years through his malfeasance.
But counterparties are far from blameless. Did nobody at these firms bother to hit up CoinGecko or look up the definition of FDV?
Most in the space recognized that Solana’s VC-backed ecosystem tokens claimed exponentially bloated valuations, primarily to dump on retail. And yet, counterparties lapped up these tokens in exchange for cold hard cash.
Uh uh. I know what you're thinking. "Did he owe us six bill or only five?" Well to tell you the truth, in all this excitement I kinda lost track myself. But being this is an FTT printing machine, the most useless collateral in the world and would blow your books clean off, you've gotta ask yourself one question: "Do I feel liquid?" Well, do ya, punk?
Number 3, never trust no-bo-dy
The pantheon of idols has finally imploded. If anything, this seismic purge gives us a real opportunity for a hard reset.
It’s now clear that 2021’s heroes were simply playing hot potato with a flaming ball of daisy-chained leverage. The net effect, of course, is that retail is left to pick up the pieces while the main culprits bide their time in obscene penthouses crowdfunded by their users.
Crypto’s vision has never been to simply digitize the moral bankruptcy of Tradfi.
As brutal as it is, this flush may be the wake up call we need to return to crypto’s core principles – decentralized value exchange built to wrestle the economic monopoly away from central banks.
With BlockFi filing for bankruptcy and Genesis on the brink, it’s likely that more big weeks await us.
Unless low liquidity volatility scalping is your bread and butter, it may be best to touch some grass for a while.
Nobody ever got liquidated waiting to deploy capital… except Do Kwon.
Welcome to PvP
