~dwulf
Keeping the peg
Luna and UST have been struggling, the golden child of DeFi has become the Blackswan event to give more veracity to the regulating thugs that want you and your crypto to be slaves in their false CBDC utopia.
Users of crypto allured by the promise of Anchor’s sweet 20% for staking UST, and holding Luna/UST in its pools, have just assumed all stable coins were stable, and all were cut from the same cloth.
By some manner of mechanism the ever dollar, would always be a dollar no matter what.
But the Luna and UST relationship broke, and the collateral backing became weak. This was enough to scare holders and backers of the protocol to abandon their positions or be liquidated.
Blame it on the Rain of Chaos?
While it is tempting to abandon DeFi and call it a scam, go with the safety of CBDC hell to be the bitch of the SEC, IRS and your new governmental and corporate overlords. I would warn against that. Sacrificing privacy for protection means your transactions will forever be not private and not protected simply and 100% controlled by a 3rd party.
Volatility is a part of the market of capital, the calibration of value and price are in constant flux. Wars, sanctions, old world economical turbulence, do not make this easier, even if you are 100% into the corrupt fiat old world economy.
Crypto, especially with DeFi are the only best option in the game, because it gives you all the control and authority over your own capital wealth.
Other Stable alternatives?
Yes, but they have issues to, and are very likely to be subject to a uncertain collateralization as in the case of USDT and its mysterious commercial papers or USDC and its centralized complications. This leaves DAI, which, to date seems solid.
But Acala has aUSD, which is decentralized, collateralized, and keeps an internal mechanism on the Acala platform to keep the network safe by liquidating vaults that exceed their minting capacity or borrowed aUSD where the vault’s collateral falls short.
Keeping the $1.00 peg, by keeping the value marks fluid.
Acala Options?
Well, as a contributor to Acala I am biased to use the Acala Option. Acala has many functions on its platform, centralized around DOT but opening up to other para-chains and even bridging to other protocols of other blockchains outside of the Polkadot eco-system.
aUSD, is the Acala version of a stable coin and is much more stable and decentralized than what is available. This includes USDT, USDC, and of course UST. The DAI coin/token, could be considered on par with aUSD, but that exists on ERC-20 Ethereum and sharding on that blockchain still needs to be sorted out.
3% is the interest to mint aUSD, meaning as long as the aUSD is outstanding you are accruing interest on the aUSD. Also the 160% sword of damocles hanging over your collateral ratio. You want to be at least 200%+ on your collateral ratio, be mindful of this, especially in a bear market.
Keep it DeFi centric and avoid exchange centralization
This includes all the popular exchanges, Coinbase, Kraken, Binance, etc. If you must use them, just know that you no longer own the keys to any and all wealth on these platforms and they can take all of your capital by hook or by crook, or by company policy.
You will want to keep wallets you have full custody over and remove all coins off centralized exchanges immediately after trades, or better still, do not exchange with them at all. Find DeFi exchanges, Uniswap, Acala, etc. and work through them exclusively. Get into the good habits and don’t get lazy with the bad habits.
Centralized exchanges are a hair’s breath from all the negative things about CBDCs, while not quite as bad, since CBDCs have unilateral control over all crypto assets within it, centralized exchanges can still delay, freeze, and hold your crypto capital. Even though you may eventually get your crypto capital back and trade, delays and complications of crypto flow are unacceptable, it is better to work within a DeFi smart contract, because you know what you are getting.
Centralized perks and the price for them
Crypto.com, is a centralized crypto exchange, marketing their metal cards of varying colours designating what tier of perks and prizes you received. They have since cut back and eliminated perks in such a way that the value of CRO coin/token required to obtain the respective perk levels to be locked, even as the CRO price dropped, leaving users without the promised perks and with the underlying CRO token diminishing in value.
Coinbase, another centralized crypto exchange, basically put all their users on notice that during bankruptcy, they have full carte blanche to seize any and all of their user’s crypto to pay off their debts with no recourse or compensation to the user.
Add to this, the mandated KYC policy and full disclosure to the IRS on all of it’s users, this makes all centralized exchanges unattractive when DeFi alternatives are just as easy to use and already available to the crypto public.
It really makes it a no brainer to shift your crypto exchange habits to DeFi exclusive means.
Conclusion
Realize that all crypto is still working itself out, while centralized crypto exchanges are easy, they are not optimal.
You will want a stable, stable coin that is in-fact stable. That would be DAI and aUSD for now. I unfortunately sometimes still get USDT and USDC which I convert out into other trusted assets, right away, until commercial paper can be more accurately defined and centralization risk of counter parties can be mitigated better.
Keep staking, and earning interest even on other protocols, like Cosmos and its sister chains. DOT is my key asset, and I am quite comfortable in the DOT ecosystem.
Ride out the bear, and Dollar Cost Average BTC.
Most of all be safe and sound, know that the blockchain protocols are only numbers based on sound calculations. If you are down, you are not out, and with tactical strategy one can get back losses (even assets that took years to acquire).
We have more options and more diversity than ever before, so come backs can be quicker because there will be more ways to grow crypto capital wealth.
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