Dead Wrong
Yield farming, Staking, Alt-Coins, DeFi and the rest of the buzz in the herd mentality
My mom likes to say “There is no such thing as a sure thing except death and taxes.” (eye roll). There are so many truisms that you could slide in from your thesaurus of platitudes here like “if it’s too good to be true, it probably isn’t.” or “if it looks like a duck, quacks like a duck, then it’s probably a duck.” (one of my favorites). In the end, we can trick our pea-brains into believing whatever piping hot silver platter is being served to us if the chants are loud and convincing enough. Superbowl commercials, celebrity endorsements, stadium naming rights and quick wins amongst friends swept me up into the madness.
While we might think we are above believing propaganda or that we can somehow beat the market, most of us are fallible homosapiens subject to the rules of psychology. The truth lies just beneath the surface, in the unspoken logic, hidden behind the latest nonsensical topic masquerading as the belle of the ball. The rules of economics can only be suspended for so long and if you remain influenced, you’ll also get swept into the fury, following the herd to the slaughterhouse.
I got caught up in it and I’m ready to admit it. Admitting your wrong is the first step toward rebuilding your own confidence and the reassurance to yourself to not make the same mistake twice. When interest rates are near zero, how does one justify producing a near “risk-free” 10% yield on your money in what effectively acts like a savings account? Yes, that’s me and the thousands of others caught up in yield farming and staking on the Celsius network. A misdirection of fancy words, terms and idealism wrapped up in one big Celsius massacre. Now, I sit like a lame duck awaiting bankruptcy proceedings for the inevitable outcome of the crypto neo-banks’ fate.
This experience reminds me of a risk matrix that I like to refer to quite often:
When it’s CONSENSUS opinion, and you follow, and the outcome is RIGHT: There is no outsized reward, but prudence and common sense. Example: “ecommerce will grow” OUTCOME: Amazon remains a strong company and a ‘relatively’ safe haven to put your money over the long term.
When it’s CONSENSUS opinion, and you follow, but the outcome is wrong - Everyone loses their shirt and you get a big calamity. Example: CONSENSUS - 2001-2007 “Real estate only goes up” OUTCOME: Housing bubbles where main street felt tremendous pain.
When it’s CONTRARIAN opinion, and you divert from the crowd, but your perspective is wrong - you lose your shirt.
When you take the CONTRARIAN stance to a consensus opinion, and you’re RIGHT - You collect everyone’s shirt while everyone else swims naked. Example: Michael Burry in 2008, the big short.
While I’m not alone in the poor judgement of Crypto as an asset class or the financial mechanisms for yield farming, I’m sure I’m not the only one who’s left swimming naked on this one.