Transcript: LUNAomics Master Class 6 & 7 Stacking Luna, the Reserve Fund, and Managing Deltas


Finn 0:41
Hello and welcome to The Ether. Today is Monday, March 7th 2022. This episode of The Ether is brought to you by WeFund. WeFund is a community crowdfunding cross-chain incubator on Terra and it’s the first launchpad that implements a milestone funding release system to protect investors. All money raised for projects is deposited in Anchor Protocol and it’s refundable, and all decisions are based on community voting power. WeFund is community focused and designed to be a user friendly experience for both project creators and investors. Be sure to follow them on Twitter and join the Telegram for more information links are in the show notes and check them out online at This episode of The Ether is also brought to you by Glow Yield. Glow Yield is the ecosystem of Terra decentralized apps like Lotto and Creators, all powered by DeFi yield. Glow Creators helps artists and influencers give their fans exclusive perks through membership NFTs and more. Glow Lotto is a price link savings account with a weekly chance to win the big jackpot. Tickets are free and perpetual, which means there’s zero chance to lose money. Be sure to follow Glow Yield on Twitter and join the Discord community to stay up to date with all the glowing projects and check them out online at TerraSpaces appreciates the support from all our sponsors. Today on The Ether, the LUNAomics Masterclass 6 and 7, stacking LUNA, a Reserve Fund, Managing Deltas, and more. Let’s take a listen.

LUNAomics 2:12
Hey, how’s it going, everyone? Jaser, thanks for co-hosting this morning.

Jaser 2:16
Of course, of course. Hello, everybody. How’s all the LUNAtics doing today?

LUNAomics 2:21
TerraSpaces, thanks for recording this. It’s been a long time. And I think this is going to be a good one. We’re going to be covering two masterclasses, 6 and 7. For those of you that are joining, we’re right about ready to get started. Jaser, anything you want to share before we jump in?

Jaser 2:43
As usual, I will be posting a Twitter thread here and the retweets you’ll see it in a second. If you have any questions that we will do an open Q&A, please post your questions on there to make it faster. Be polite once you guys have asked your questions, step down from the speaker. And thank you.

LUNAomics 3:02
Awesome. Yeah, tons going on. I jumped on Twitter this morning, saw like three different TerraSpaces going on. I think Cephii and Bigt had their Passive Income one that they do every morning and every… That’s for newbies, and then they do another one during the evening that’s more in depth into different strategies. And then Mars, they had one that was going on and I saw another one, there’s about three different TerraSpaces. This is the first one that I saw so many at the same time. But there’s a lot happening in the ecosystem, it’s really hard to keep up with all the new things that are going on. I think Prism Farm is starting today. So just a lot of exciting things happening. It’s really hard to keep up and if you notice, LUNA is holding its price pretty strongly against the broad market. So even though bitcoin is below 40,000 at 37,000 and then the S&P 500 is down quite a bit from all time highs, Terra seems to be holding its place so I think it’s just because there’s so much going on if you look at the demand of UST and how much UST is being created and how much LUNA is being burned every day. We’re at capacity. I’d really be interested in knowing if there wasn’t a roof limit on how much LUNA could be burned per day. It would be interesting to see how much that would be, ’cause that does affect the price of LUNA. But it seems like so much is happening in the ecosystem that there’s a lot of support, not just volume wise that’s keeping the price of LUNA up but just fundamentally so many things that are demanding the use of UST. I just got a beta for Alice, and it’s awesome. It’s so awesome. I think there’s like two different groups I did yesterday, where we did a chain thing and we shared the Alice invite to a chain of people in private DM. I’ll probably keep doing that if I get another invite. But I invited 10 people into a group, I had one invite, I shared it. And then we kind of just did like, you take one, you get two, and you share one till everybody has one. And we did that a couple of times. And then they started doing it so hopefully that will catch on till the LUNAtics get an invite to Alice.

LUNAomics 5:44
But I had a class last night in person in Hawaii, I live in Hawaii, and we did the same thing. And everybody was able to transfer money from their bank accounts to the Alice app, from Alice app to their Terra wallet, straight from the Terra wallet back to Alice. It works really smoothly. So once you have that off-ramp where you can spend it. That’s going to be crazy. I think I’m super excited for Alice to iron out all the kinks and get that going because… Especially with inflation, I mean, just at the pump, I’m spending $60-$70 per week on gas. And if I could spend that on Alice and spend UST and everybody could do that, man, we’d have huge demand for UST that would burn LUNA. So pretty excited about that. I don’t know. Any other responses, Jaser, before we jump in?

Jaser 6:45
Nope, let’s kick it off.

LUNAomics 6:46
Alright, for those of you that don’t know, my story is that I started in traditional finance about 20 years ago, traded options on futures and did pretty well, and went from traditional finance, started dabbling in crypto right around 2017, before the big pump, experienced the big pump up to $20,000 in the price of Bitcoin, and then also the crash down to like $3,000. I got my kids involved. My oldest daughter’s in college right now and she has a nice amount… She had a nice amount of bitcoin. My son also started saving in crypto in 2017.

LUNAomics 7:28
And then as things started picking up… So one of the things that happened that was real significant was I shorted the market when Wuhan got the virus and right when it hit the shores of Seattle, I shorted the market, made some money there and then went long when the VIX hit, I think it was $60 or $70, went long the market, made a little bit money there. And then that’s when Bitcoin started to take off. So I moved all the money from traditional markets into crypto. And crypto started taking off at the end of 2019 into 2020. I think that was right 2000 Or was it 20 into 2120 into 21. And then my friend introduced me to… So I was trying to find something in crypto that I could use my financial understandings. And the only thing that I could find was Synthetix on the Ethereum blockchain. And it was cool, but you just couldn’t do a lot on it. It wasn’t really representative of a true free market. And then my friend showed me Mirror. And when I saw Mirror, it was really interesting. I started trading on it. But when he showed me the liquidity pools, and I understood market making, and that this is really decentralized market making, something just clicked in my head where I realized this macro trend of decentralization is now hitting finance. And normally, the people that make all the money on the stock exchanges are the market makers, the big banks, because it doesn’t matter if it goes up or down, they make money just providing the market. So when I saw that, and I could just use the capital that I had, I didn’t have to have millions of dollars. That’s what really clicked for me. And if I didn’t have that financial background, I would have thought making 50%, 100% returns for market making is probably a scam, or a rug pull or something. But understanding how markets worked and how market makers did make a lot of money, and banks, it just really…

LUNAomics 9:47
And I was an Amazon seller as well. So I was participating in the decentralized macro trend and actually waiting for it to hit finance. And so when I saw that I just went all in to the Terra ecosystem. It was when Anchor dropped and I realized that decentralization was not just hitting market making but it was also hitting banks. That I was just sold, and just the snappiness of the transactions and the low fees, and being… And it was so lucrative to be… There was nothing at that time, I still don’t think there’s anything that pays you to borrow. So I just went all in, and did it in a safe way, but went all in then, and then started doing different strategies and basically turned 6,000 from my initial stack, in traditionalFi, all the way to several million. And that’s kind of my story.

LUNAomics 10:50
So as I was on that journey, I just started tweeting what I was doing that I was finding success in so that other people could find that useful and incorporate some of the strategies into their own way that they use Terra. So that’s where the pinned tweets come in. The only Spaces that I do, really, are… Well, most of the Spaces that I do are focused around the pinned tweets. Thanks to TerraSpaces, we can take a link and we can have the strategy that’s in the pinned tweets where people can read through it, and then spreadsheets that people make and tweak to make better on that pinned tweet resource. And then audio that goes through AMA on what those strategies are.

LUNAomics 11:37
So just to give you a brief background, or the way to use the pinned tweets, when you jump on the pinned tweets and you start reading through everything, it gives you a step-by-step process and strategy of how I use the Terra ecosystem to go from 6,000 to several million dollars. And it’s not to be used as… When you read the first class, or you go through the first class to implement everything in the first class because a lot of things have changed since that first class. So I talked about MINE LPs, and ANC LPs and things that I’ve done at the beginning of 2021. But I wouldn’t recommend just going straight to the last class because it’s almost like you have to understand the first class to understand the last class. So it’s a process that I think everyone has to… To really get the most out of it, you have to go through the first one, understand kind of the concepts behind it, go to the next one, understand the concepts behind it, understand the risk management behind those strategies. And then as the Terra ecosystem evolved, I mean, we had all of these protocols come in, Terra alts pump and dump, and people made and lost tons of money. And so the environment is constantly changing, and we have to constantly change with that environment. And so those classes kind of show the evolution of the Terra eco space, and so if you go through those lessons in order, go through it with kind of like this is a historical playbook that shows what was working in the past and how it’s evolved to today. So for those of you that are joining are gonna listen to the Space, that’s the way that we use the pinned tweet.

LUNAomics 13:26
And so somebody made a post a couple of days ago that says, “It’s so funny that 50% of all the comments that are posted on your tweets are all questions that could be answered if they just read the pinned tweet,” and that’s so true. I’ll post something and then people will say, “How do you do this? How do you do that,” and it’s all there in the pinned tweets. It’s made so that anybody that doesn’t know anything can just go through the first one all the way down to the last one and kind of have a basic idea of how to use at least Anchor pretty well. So I’ll just start with the six… I’m going to go through the masterclass 6, and kind of explain that. And then the way that I’m dividing it up this morning is I’m going to share kind of the strategy of class 6, the stacking rebalancing hybrid, and then kind of the thought process of why I incorporated that into this strategy, the conclusion of it, and then I’m going to jump into class seven, or we could take a break right there and then open it up for questions. And then class seven is the bulletproof strategy. I’m gonna explain that strategy quickly, the thought process behind it, the pros and cons of it, and then the introduction to delta because I think delta is super important. It was super important when I was trading in traditionalFi and then once I started doing crypto I kind of stopped paying attention to it because I didn’t feel It was necessary. But then I revisited it last week, put it on a spreadsheet, and realize it was one of the reasons why I lost a couple million in the last 50% pullback.

LUNAomics 15:13
So even though I was safe from liquidation, I wasn’t really safe when it came to my delta risk so I’m incorporating that into my strategy. That’s becoming a really important metric for me to look at, especially now that the price swings of LUNA are getting more volatile, as the liquid supply is dropping. And I think the liquid supply is going to continue to drop, the volatility is going to increase, we’re going to see… I think we’re going to see LUNA… When the supply shock really takes effect, and the demand increases, we’re gonna see it jump to the upside, which will be good. But I think a lot of people will leverage in at those higher prices and we’re going to see volatility to the downside as well. And so, if you don’t keep your eye on your average true range and your delta risk, it could be very dangerous. And I’m just saying that the average true range is becoming very volatile as well. So it’s something just to understand and keep your eye on. It doesn’t have to guide everything that you do, but just to understand it will give you another perspective of your risk.

LUNAomics 16:25
So class 6 was rebalancer strategy. And I like to be transparent with my numbers. One of the reasons… I just feel it’s like not… I hate people that just post all the gains that they do. And I’ve posted my million dollar trade and different things like that, but I know how much I lose on the downside as well. And I don’t like the fact that people are constantly comparing themselves against people’s gains, but people are not transparent about their losses. And so it’s kind of unfair when people are comparing themselves against someone else’s gains, but they don’t know how much the person has lost on the opposite side. And anytime you expose yourself to risk, you’re exposing yourself to risk on the upside and downside, so I like to share both the victories and defeats, the gains and the losses. And so in the last pullback, I lost 50% as the market fell 50%. And as I was going through the thought process, I was just thinking, “Well, what would have happened if…” Because what I do personally is every single time my account makes an all time high, I’ll take a snapshot of it, just as a motivational thing for me. And it’s really cool, now I can go back to 2017 and I can see when my account started at, like $6,000, and then how it just grew over time to where it is now.

LUNAomics 17:53
So every time it makes an all time high, I’ll take a snapshot of it. And I’ll save it in a Google Photo Album, and just be able to scroll through it. And it also gives me confidence because over this, I guess it’s like a five year period, four year period, that every single time there’s an all time high, there’s always a huge drawback. But then I have record of making that all time high again, and then surpassing it. And so now even though I’m below my all time high, there’s this tracker that I can go back and look at, and it gives me confidence knowing that I’ve seen it in the past, I’m going to see it again in the future, that a pullback is not the end, and it’s just the coolest thing to do. And so so I take snapshots of every all time high. What happened in this past pullback was that I went from about 5 million to 2.5 million, maybe a little bit lower than 2.5 million. And I was thinking, “Man, what if when I took that snapshot of my all time high in my account, that I just put 10% aside, 10%-20% aside, and just stuck it in Anchor Earn so that it’s earning me that 20% interest.” And so say I pulled 20% off of that all time high, that would have been $1,000,000, and 20% of a million dollars, I would be making stable yield of $200,000 a year just on Anchor Earn. So I was thinking about that and I was like, “I should actually start looking at what it would look like if I put aside 10% so that in the event of a pullback, that I have some capital on the side and even have that capital to redeploy at certain levels in the market.”

LUNAomics 19:38
So for those of you that don’t know, before this, in the first class, the main strategy that I use in 2021 to make a 30x return was using LUNA to stack LUNA. So whenever LUNA would go up, I would just increase my LTV to 30%, keep it at 30% as LUNA was going up, and then just defend as it’s going down by rebalancing, or keeping my LTV at 30%-45%. So in doing that, every single time the price of LUNA went up, I would use the increase borrowed capacity of LUNA to stack more LUNA. And at the end of the year, I look back and it was just crazy the return that I got. And I didn’t understand what I was doing until I kind of evaluated that. So that was kind of like the foundational strategy for that massive return. And then, so I tweeted about that. And then we had a fifth… And then I tweeted about risk management, which I’m so glad that I did. Because right after I tweeted about the risk management and had everybody look at that, we actually had that 50% correction. And thank God, I did that because a lot of people were protected on the way down because they knew how to manage their risks. So that was just awesome. So as I was kind of thinking through what could I have done better to use chaos as a ladder, that’s another tweet, but to use that pullback to benefit from.

LUNAomics 21:08
Cephii talks a lot about dynamic dollar cost averaging on the way down, and in my strategy, I can’t do that because I don’t have any capital to do that if all I’m doing is leveraging when we go up. So I was just thinking through how can I kind of incorporate what Cephii is doing in the dynamic dollar cost averaging, and also use my stacking strategy to leverage on the way up, and use the increasing price of LUNA to buy more LUNA because it gets increasingly hard to buy more LUNA and stack more LUNA as the price goes up. So that’s where this came from, just the rebalancer stacking hybrid strategy.

LUNAomics 21:53
And so what I did was, I went back and took historical data of 2021 and looked at how deep these pullbacks were. S the thought process was, how much could I have made if I saved a million dollars at the top, like 20%, or half a million at the top, and then redeployed it at certain percent pullbacks. So what if I had held it all… My first thought was, what if I held it all and then it dropped that 50%, and then I deployed that half a million dollars after LUNA dropped 50%, then I would just be sitting pretty, I would have like way more LUNA, I wouldn’t have stressed it all on the way down because I just have this stacked on the side. But then nobody knows the exact bottom. So should I deploy it at 50%, should I deploy it 40%, 30%, 10%, what’s the optimal pullback to redeploy that capital? So then I went back to 2021 to get historical data, found that there was only one time that we pulled back more than 60%. So if I had that half a million just sitting on the side, it would have been making 20%, and I guess that’s great. But I don’t know if that’s like the most efficient use of capital for it to be sitting on the side that long and not rebalancing back in a certain pullback.

LUNAomics 23:30
So there was one time that went 60% down. There was two times that it went down below 50%, and one of them was that December 50% pullback. And so I ran the numbers that if I took 10% off the top and I redeployed it once, I would have actually lost LUNA because I’m taking LUNA off the top and I’m only redeploying it one time at the bottom. So that didn’t seem like it was a good strategy. Then I did it twice, I still had a little bit less LUNA. And so to make a long story short, the conclusion was that a 10% off the top, and then redeploying it at 30% seem to be the sweet spot if you take 2001 data, because there was, I think, seven times that we pulled back more than 30%. And if you could redeploy… Every single time your account made an all time high, if you took 10% off of the top and redeployed it at a 30% pullback, you would have increased the amount of LUNA, not by a huge amount, but you would have increased your amount of LUNA. So that became kind of a sweet spot for that strategy. I was holding that mentally we haven’t had that yet since that time so I haven’t had a chance to actually practice that, but that was the thought process. So that was kind of the whole conclusion and thought process behind the masterclass number six.

LUNAomics 25:18
Another thing when you put 10% away on the side and just have that cash reserve, it allows you to dynamic dollar cost average if you want to do that. And then I think mentally, it helps knowing that there’s this reserve cash fund on the side and it almost makes you want the market to fall so that you can deploy it. So it’s kind of some brain ninja thing where you want the market to go up, but then you’re kind of happy when the market goes down. And it eliminates a lot of the anxiety and the fear of pullbacks.

LUNAomics 25:51
So, that was class 6. I think we’re 30 minutes in, Jaser, or what do you think, should we do a question and answer on class 6 before we jump into class seven? Or should we just jump into class seven?

Jaser 26:08
Yeah, let’s do a quick couple of questions, bring up some folks. We’ve got one request. I’ll bring him on board. And then we’ve got one question on here, how can one move from a previous strategy into this new bulletproof strategy?

LUNAomics 26:26
Okay, so the bulletproof strategy is class seven. But the way that you’d do it is just to readjust your LTVs and kind of start from scratch. That’s what I did.

Jaser 26:39
Got it, we’re going to take a deeper dive into that. So that question will be elaborated on next. $cott, I see that you joining in. $cott.

$cott 26:47
Good morning, everybody.

LUNAomics 26:49
Hey, $cott.

$cott 26:50
How’s everyone doing?

LUNAomics 26:51
Morning, good, good.

$cott 26:53
So I had a question. So on your 10% off the all time high, you fund UST, do you stick it in Earn while you’re waiting for that drop? Are you arbing? Are you making use of it while you’re waiting?

LUNAomics 27:11
Yeah, so I just put it in Anchor Earn, it becomes just a reserve cash fund. And I guess anybody can do anything with that. But if you take that and you start doing things with that, it kind of… And you expose it to risk, then it kind of defeats the purpose of having that reserve parachute fund. So, I mean, anybody can do anything they want, I like to just to keep it in Anchor Earn and get that 20%.

$cott 27:39
Thank you.

brian 27:40
So when it comes to going to 10% reserve, are you selling LUNA that you bought with borrowed capital, or something that…

LUNAomics 27:53
So when I initially did it, I had to deleverage a bit and sell some of the liquid LUNA that I had. So I divided my LUNA into regular LUNA that is converted to bLUNA, parked in Anchor, where I never, never, never want to sell that. That’s my owned LUNA I guess. And then I use the borrowed capital to purchase more LUNA and that I consider my liquid LUNA, I can sell that if I want to, sell that I can buy more, kind of manage my LTV around that. So yes, I have to sell some of that LUNA to bring my LTV down so that I could withdraw 10% of my equity balance. So I look at my equity not how much LUNA I own or any of that, I look at how much is the net worth of my account and then take out that much UST into a reserve fund and I actually pull it into a different wallet. I’ll make another wallet, pull it into a different wallet, and just separate it so that it’s very clear to me that I have that on the side. And then in my original wallet, I’ll manage my LTV as if I didn’t have it there.

brian 29:14
Gotcha. Gotcha. Okay, yeah, that makes sense.

LUNAomics 29:19
Cool, great question. Any other questions?

Jaser 29:24
We got ShareWizard is gonna be the last question for this round.

LUNAomics 29:27
Ok cool.

ShareWizard 29:28
Hey, guys, appreciate the Space. Hey, Shigeo. Less popular question, but one that I’ve been thinking a lot for myself trying to improve on everything from month to month, year after year. And with this strategy, it kind of coincides a little bit with my own but one thing that I’d love to get your thought process on, not necessarily financial advice, is how you think about allocating a portion of whatever you accrue as cap gains for payment of taxes. Just as a thought process.

LUNAomics 30:04
Yeah, I need to be better at that. I don’t know yet. This is the first year that I’m probably going to have to pay a lot of taxes. I’m not sure how it’s gonna work out. I’m still trying to figure that out. And I haven’t found a good solution yet for that. I’ve been using and Track Terra to kind of download all of my transactions and then upload it into Koinly, and then I’m buying expert review. And right now that expert review is going through all those transactions and kind of like looking at the ones that are pulling up flags. And it’s a nightmare. So yeah, I don’t know, I don’t even know what that tax liability is going to be. But I do have enough on the side to pay whatever it is. But yeah, that’s a good question. Maybe that would… I don’t think that I would ever set aside a reserve fund for that, just because that would be kind of a lot to put on the side. But then again, if you don’t have it, then you go to jail. So I don’t know. [chuckle] Yeah. That’s a good question. I should ask Hutch about that.

ShareWizard 31:31
Appreciate the transparency as always.

LUNAomics 31:34
Yeah, yeah. Yeah, I know that I have enough on the side that I could pay for it. And worst case scenario, sell LUNA to get it, but yeah, I hate taxes. And I hate accounting. I hate all that stuff. I just like… That’s the stuff I enjoy. [chuckle] I avoid the things that I don’t enjoy.

Jaser 31:57
Awesome. Thanks for the transparency. All right, cool. That is all the questions for this round. We’ll go ahead and kick it off to class 7. And then we’ll open it back up for some questions and answers.

LUNAomics 32:09
Okay, so… Thanks, Jaser. And then Jaser has to leave in about 25 minutes. So I’m not sure if there’s someone else that would want to co-host or, or whatever. So okay, so class 7, bulletproof strategy. I recently left my job, and I have some other means of income that do come in, not nearly as significant as crypto. But even at the levels that I’m at, which isn’t… It’s a lot, but it’s not… I still get nervous about… It could all go… I don’t know, if something crazy happened, I don’t know. But it’s just different for me not to have a W2 paycheck. Mentally, it’s a weird transition to just be living off of crypto. And I’m getting used to it, this is like the… I’m going into the third month of just living 100% off crypto. So I think just that mental adjustment, I’m looking… Crypto before to me was just icing on the cake, it was just like, this whole thing can go away, and I’m still good with my W2. That’s not the case anymore. And so now I’m not as degen and all the things that I’m doing, I’m trying to look at it like… if I’m going to live off this for the rest of my life, I need to be a little bit more conservative. So that’s kind of where the bulletproof strategy has come from. I don’t want it all to go poof. I want to be able to be in here for the long run. So if it’s true that LUNA is going to $1,000, and $10,000, and it will be in the top three, top two coins in the future, I want to make sure that I’m around for that. And if that means that I need to lower my LTV to maybe 20%, and just stack LUNA with LUNA with that amount, and to live off Anchor Earn and the borrowing rewards, then so be it. I just want to be solvent when LUNA hits those levels.

LUNAomics 34:32
That’s one of the things that really motivates me, is I look at Bitcoin and the price of Bitcoin, and we fluctuate at thousands of dollars every single day. And right now if you’re holding 1,000 LUNA, that means that your account would be fluctuating every day in the millions of dollars. I think we’re going to get there one day and anybody that has the foresight to see that we’re going to be fluctuating, we’re going to have Average True Range in LUNA of $1,000 a day, and you’re holding $1,000, that is just amazing to think about that you can be making or losing a million dollars every single day. And I think that’s going to happen sooner than a lot of people think.

LUNAomics 35:18
So, thinking long term that LUNA is headed in that direction, I don’t want to fall off the train, and I know no one in this room wants to fall off the train as well. So that’s where this bulletproof strategy has kind of come from. So before us putting everything, I would push everything to 35% LTV, or 45% LTV and then use it to do a LUNA-UST LP, make money off of that, and kind of stack LUNA with LUNA and just manage that LTV. So what I’ve done recently, is looking at the 80% capacity of Anchor, and wanting to utilize that, but not wanting to get into a greater level of risk, what I decided to do is just instead of going to 45% LTV, I’m just borrowing 35%, 30%-35% LTV. And then in borrowing 30%-35% LTV, if I looped that, so I borrowed the 30%-35%, I’ll buy LUNA, after having LUNA, if I provide that back to the protocol, I’ll have more borrowing capacity. A lot of people look at that and say that that’s risky, looping is risky. It is risky if you take that extra borrowing power, and you put it into something that is risky, right. So if I loop my LUNA at 35%, and then just to get more borrowing potential, and I dropped my LTV down to 25%, and then push it all the way up to 80% or 75%, and then buy LUNA with it. That’s extremely, extremely risky. But if I look at that 30% LTV, I buy LUNA with it, reprovide it to the protocol, all it does is it pushes my LTV down. So it pushes my LTV down from 35% down to 25%, 20-something percent. Now I’m safer in the realm of liquidation. If you look at…

LUNAomics 37:37
I’m looking at my at my sheet right now. And if I’m at a 35% LTV, my liquidation price will be $34 from the current levels that we’re at. But if I loop it, that liquidation level will drop down to $25. So that liquidation level drops by $10. So, all I’m doing is I’m getting to a safer place when I loop and then I’m not going to take all that money and then buy LUNA with it. Because I mean people can do that but you’re just increasing your risk. You’re also increasing your exposure to price and reward. But that’s not the purpose of why I’m looping. So when I loop, I just want to get to a safer place. And then I push everything up because now we have that 80% LTV borrowing capacity, I push everything up to 75% borrow, and then dump the whole thing in Anchor. And I’m just living off of the Anchor rewards and borrowing rewards. So that’s the current strategy. So right now, the actual metrics of this is if you are at a 35% LTV, your liquidation drawdown is 56%. But if you loop it, it goes down to 67.59%. So you actually get 10% more safe when you loop. If you add to that strategy, the reserve cash strategy, where you take 10% off the top, and then you do this, you have 10% reserve on the side to where if you do drawdown this 67% and you’re facing liquidation at the 67% drawdown, you still have 10% equity that you put aside at the top that you can redeploy. So your liquidation level actually is way lower than that 67%. I haven’t done the calculations on that. but I would assume that it’s over 80% that LUNA would have to drop 80% before you’re at any risk of liquidation. That’s why I call it bulletproof. It’s, it’s like a bulletproof vest, it doesn’t ensure that you’re not going to die, but it gives you a lot of protection from a risk of ruin.

LUNAomics 40:18
So that’s kind of the the thought process behind the bulletproof strategy. So the pros is that I’ll take all of that increased borrowing capacity of Anchor, and I can just dump it into Anchor Ear, make 20% of that. And because I’m borrowing more money, then I get also the rewards of Anchor Protocol for borrowing which currently is at… So right now it’s at 15.71%. So I’ll be getting the 15.71% on everything that I’m borrowing, and borrowing to the 75% usage, which is 60% LTV plus everything that I put in Earn I’m making 20%. So it’s like 35% that I’m making on that money. And that’s a great cashflow… For me, that’s a great cashflow that more than makes up for my living expenses. It’s probably… I can live off 10% of that. So one of the big questions, I posted something yesterday and then everybody’s like, “How do you do this tax free stuff? And how do you not pay back your loan?” It’s the same questions every single time I post something like that, but the borrow… So just to clarify, most of the people in this room, I think, know this. But your net APR on borrowing is how much the protocol is charging you to borrow minus how much it’s giving you in distribution APR. So that distribution APR shows up on your My Page as rewards, and that rewards are given in Anchor. And those rewards currently are at 15.71%. So I look at that as my income, and but the Anchor Protocol says, “Well, but we’re charging you 7.58%. And therefore your net APR is only 3.12%.” But I don’t care about the borrow APR, because the borrow APR, it adds to my borrowed value. So it’s increasing my borrow value because it’s charging me for that. But the more that my borrowed value goes up, the more I make in my distribution APR. So that’s one advantage of having an increased amount of borrowed value.

LUNAomics 42:59
The risk is that people say, “Well, that borrowed value is now increasing. And that’s a scary thing,” because they’re thinking in terms of traditional finance. So in traditional finance, if I had like a million dollar loan, and I was getting charged 12%, that is scary. That’s a scary thing to think about. But if I can write off on my taxes, the interest as a business expense, then it offsets a good deal of the distribution APR that I’m receiving on the My Page rewards. So that My Page rewards is cash that’s coming in to me that I can use for anything, it’s offset by the expense, the business expense of the borrow APR. Not only that… So I do have this risk then of this 12.58% borrow APR, but it’s being compared to the value of my collateral. So if the value of my collateral goes up 12.58%, then I’m at breakeven. So my collateral is LUNA. And if I look at LUNA, and I anticipate that LUNA is going to make more than 12.58%, then I’m good. My anticipation of LUNA is that it’s going to 10x. And so that’s 900% return. If that’s true, then that 12.58% becomes completely irrelevant, and just becomes a tax write off for my distribution APR. So that’s the way I view that. And not everybody has to view that that way, I mean… But that’s the way I look at it.

LUNAomics 44:41
Everything that comes into my Earn, I spend. I’ll either spend it in my real life, or I’ll just buy more LUNA with it. So that is total spendable income to me. I can use that for speculation, I can… That’s what I use to jump into Prism, the p and y when it first came out and played around with that. I used it for this Prism Farming stuff. It’s all just speculation money that I can play around with. But that borrow part that is being added to my borrowed value, I almost look at it like an irrelevant event. So that’s I think there was a lot of questions on that. And then, yeah, so the pros of this whole thing is that it’s way more… And anytime that LUNA drops, I have this huge amount in Anchor Earn, that I can in two seconds, just move from Anchor Earn to pay down my loan. So I don’t even look at my liquidation level on Anchor as a true reflection of my liquidation level. I take the amount of my capital that’s in Anchor Earn, and if I moved all of that to repay my loan, that’s what I look at as my liquidation level. So right now, I think my liquidation level, if I took everything in my reserve… Not my reserve fund but my Anchor account, and I used it to repay down my loan, I would be in the low 30s, probably high 20s, low 30s, level of liquidation, then I have my reserve fund that I can bring in there and probably bring it down to low 20s. So I’m creating cashflow in a really safe place, want to be around till LUNA hits 1,000, 10,000, and kind of having enough cashflow to throw at different projects that I find interesting. So that’s the summary of the class 7. So I guess we’ll open it up to questions. Before I jump into delta.

Jaser 46:57
Sweet, let’s go ahead and get TheLegacy to come on board.

LUNAomics 47:03
Hey, Legacy, how’s it going?

PastramiOnRye 47:05
Good, good. Question. So like… Sorry, I’m at the gym right now too and there’s Spaces all morning. But the spreadsheets that you have, and I was just thinking about it, I’m like, well, I’d love to obviously start with my stack now. But what about… What sort of formula do I need to create for a spreadsheet for if I were to hybrid, your strategy with Anchor and everything, but I’m also allocating a certain number of capital monthly, over the course of the next, I don’t know, 10 months with the assumption that LUNA hits $1,000 by December, or hell, even December of 2023 or something like that. So I guess I’ll mess around with it with an accounting buddy of mine, who’s an Excel wizard. But yeah, I’m just allocating capital, plus the strategy that you’re doing. Ultimately, if everything goes to plan, what is the max yield at the end of the year for growing yourself? So that’s my question.

LUNAomics 48:30
Yeah, I think you could just make a separate spreadsheet that kind of puts those numbers in if you have an extra 100, or whatever amount that you’re going to put into, just add that into your initial… How much you’re going to be putting into it, and then just look at the numbers. So you can’t… Nobody has a crystal ball of where LUNA is going to be, we just know that a year from now it’s going to… 90% chance it’s going to be higher than it is today. So according to your conviction, just allocate capital and you’re exposing yourself to reward but also to risk, so just be careful.

PastramiOnRye 49:13
Thanks. Yeah.

TheLegacy 49:15

LUNAomics 49:15
Hey, how’s it going?

TheLegacy 49:16
Hi, I appreciate the Spaces that you guys are doing. It’s really informative.

LUNAomics 49:20
Yeah, awesome. Love doing it.

TheLegacy 49:24
Before all of this kind of kicked off, I was on… I staked my LUNA, all of it, on for like 3% for three months. And only recently, like the past two months, have I kind of followed what you’ve written, and kind of tried to digest everything about the ecosystem. And I realized how, what a stupid mistake that was. [chuckle]

LUNAomics 49:50
Well, is not being the best centralized exchange where they keep all of your yield for themselves.

TheLegacy 49:58
I know and basically All my stuff is gonna unlock in a couple of weeks, my bag of LUNA, and I’m trying to look at all the strategies that you have that other people have. And obviously, they all of them require different amounts of work, right, especially liquidity, farming and all the Prism stuff, it takes a lot of time. And for me, from what I understand, just stacking LUNA may just be the easiest option in the long run, rather than eke out every single piece of UST possible, and having to monitor because obviously, it does take so much time.

LUNAomics 50:38
Yeah, and it’s gonna get more crazy as we get into the future, and more people learn how to use Rust, and the developers that are using Rust get more proficient in it, you’re gonna see way more protocols develop and way more opportunity. And at some point, it’s just like… I don’t know, is it just about knowing everything about Terra and the ecosystem, or using it as a tool to increase your lifestyle and to lessen the financial stress around your life and bettering the lifestyle of the people around you. So it’s so easy to just get sucked into it, because it’s so fun. But at the end of the day, I have to pull back and look at, okay, am I serving the Terra ecosystem like I do and this is the way that I do it. But am I using it as a tool or vice versa? So you just got to find where you are in your own time allotment, like how much you can give to your family, and to this, and to everything else that you… Obligations that you have in your life and then just manage it. So that… I mean, we have an amazing tool in our lives now with Terra that we can use it to benefit our lifestyle so much more than anything else that I’ve ever seen in my life.

TheLegacy 52:03
I agree. I’ve been in crypto for about… Since 2017. And actually, I didn’t believe in it, really until the past two months because DeFi was… For most people it’s a dream, isn’t it? It’s just not easy to use, and Anchor makes it super easy. For me I’m not a super tech person, but it only took me a few hours to work out how to do it and to borrow. And I think it was really amazing because all the other ecosystems, they are not that easy to use compared to Anchor. I think Anchor is main thing that is kind of driving…

LUNAomics 52:39
It’s the anchor.

TheLegacy 52:40
Yeah, it is the Anchor.

LUNAomics 52:42
Yeah, it’s amazing. And my friend just bought a new house. And he said that the process of borrowing money to buy his home, it’s like a million dollar home, he said it was so painstakingly slow and just such a hassle. And he said comparing it to Anchor where you just slide the bar and you have all this money, he said the writing is on the wall that DeFi is going to take over, it’s just a matter of time.

TheLegacy 53:14
The thing is, how do people offer up money? Because you can borrow and then you have the UST, but I live in England, it’s really hard to take money out actually from crypto into fiat, because you can’t really use the UST to buy a house or you can’t use it to buy a car.

LUNAomics 53:29
That’s just a matter of time. I just talked to this… he reached out to me. And he actually lives close to where I live. And he was telling me that he was using different things to wire funds. I believe it was Voyager, he used Voyager to wire a large amount for the downpayment of a house. And he’s originally from Italy. I think he’s an Italy citizen, but I think he has dual citizenship to the US and he’s using crypto to put a downpayment for a house in Hawaii. So those on-ramps and off-ramps are on their way. With Alice, if you look at the FAQ docs on the Alice app, I think it was like 10 million per month is the limit. There’s limits per day, or per transaction. But the limits per month are just the most I’ve ever seen. And then everybody that I’ve given codes to, Alice is so smooth and when they work out the kinks from their beta, it’s awesome. I mean, one of the things with the class that I teach, they were having such a hard time wiring money into Kraken, and then from Kraken buying Bitcoin, shooting it over to KuCoin, changing it to LUNA, and then sending it to a LUNA wallet. With Alice, you bypass all of those steps and you can instantly send money from your bank account into your Alice card that immediately starts earning 20%. And everybody in the class, when they had that on their phone, they’re like, “Why the heck would I be using any other…” Like the Cash app, or Venmo, or any of these other payment systems when they could be making 20%. And it’s so true what Do said, that the ones that don’t convert into DeFi and start using something like Anchor, they’re all in jeopardy of losing their place very quickly. Because when you compare 3% cashback to 20% yield, if they don’t change, they’re gonna lose the market. And they’re gonna lose it pretty fast.

TheLegacy 55:42
Oh, that’s super interesting. I’ve got one more just a quick question, when my stuff unlocks, is it more efficient to do what you were saying with the bulletproof strategy where you put it in, and then you’re using the UST to spend, or just borrowing and then just buying a whole load of LUNA, and then keep looping it that way?

LUNAomics 56:00
The more that you loop, if you’re using the extra leverage to buy LUNA, you’re also increasing your risk. So yeah, when LUNA goes down, if you used your borrowing capacity to buy more LUNA, all you need is a 50% correction to put you in a really junk spot. So just be really careful when you’re looping, always keep an eye on your loan to value ratio. And definitely your deltas in the future. I’m going to go into that in the next segment.

TheLegacy 56:31
You could do a mixture of both those strategies, right. The one that you’re talking about where you are putting money into Borrow, use that UST and using that as your spend, but also buying more LUNA, right, when the price goes down?

LUNAomics 56:45
No, so I’m not using the UST from borrow to spend. I’m using the UST from Borrow to put into Earn. And then the interest on Earn, that’s what I spend. Yeah, I’m not spending the amount that I can borrow. I use that to dump into Anchor Earn. And then that 20% yield that comes out of that account, that’s what I spend.

TheLegacy 57:11
Is that paid per day or per week?

LUNAomics 57:14
It’s paid per block. So like… I don’t know how long a block is probably like… I don’t know, somebody in here might know, maybe an hour or something? Less than an hour?

Tripleyak 57:24
I think it’s six seconds.

LUNAomics 57:26
[chuckle] Six seconds. So yeah, you get paid. You get paid per block, I believe.

TheLegacy 57:30
And how often do you normally just take out of that Earn to spend? Just when you need it or…

LUNAomics 57:36
Yeah, just when I need it because it’s earning me interest. So I don’t touch it until I need it.

TheLegacy 57:42
Okay, and bLUNA doesn’t earn anything while it’s in Anchor, or it does?

LUNAomics 57:46
It does. Not in Anchor. If you… Yeah, so if you’re providing it as collateral, you don’t get the interest on it. But if it’s sitting in your wallet, then you’ll get I think 8%-9% interest on it or something.

TheLegacy 58:01
Okay, cause I couldn’t find that stat somewhere. So okay, that’s really helpful.

LUNAomics 58:05
Yeah, no problem.

TheLegacy 58:07
Thank you so much. You’re amazing.

LUNAomics 58:09

Jaser 58:10
And many folks have asked that same question is, if I just bought 100 LUNA right now, what should I do, right, very similar kind of scenario where TheLegacy said, “Hey, I’ve got a stack of LUNA that’s going to unlock and allow me to spend it however I want in the strategy I want.” That’s your answer right there. So for those folks that have that question. I’m going to go ahead and pass the mic over to Tripleyak.

LUNAomics 58:36
Hey, Tripleyak.

Tripleyak 58:37
Hey, what’s up LUNAomics? Thanks for doing an amazing space.

LUNAomics 58:41
Yeah. No problem.

Tripleyak 58:42
Quick question. So with the UST that’s sitting in Earn, specifically with the 10% that you’re kind of reserving for big drops to buy the dip and manage your LTV more aggressively at those nice discounted prices. Have you thought about taking some amount of that, maybe like 5% of that, or even the whole 10%, and kind of looping it through Mirror on the borrow side to leverage it up so that you’re getting… Since it’s just sitting there, if you were to borrow and then sell Coca-Cola or something that’s very stable and doesn’t have massive swings to the upside, wouldn’t you be able to increase your yield on that 10% of your portfolio that’s just meant to sit in Anchor Earn, and that could even give you even more kind of firepower when LUNA goes down?

LUNAomics 59:41
So going with your example of using the aUST as collateral to short Coke, you’re still… I don’t think that the risk exposure to shorting Coke is worth the additional interest. That’s just me personally, and I’ve been in markets pretty long. And I’ve seen markets rally longer than is rational. And right now we have a huge drop, I wouldn’t want to be short anything right now. I mean, even though it’s a depressed market, and maybe we’re gonna see a crash or correction, over the long run risk is really to the upside. If you’re holding short delta, you’re constantly battling that upward drift of the market. All the 401ks and everything every single month just gets dumped into the market. So there’s this upward skew of the dollar, it’s been going up 8%-12% every single year. So if you’re on the short side, you’re actually a little bit at risk, and you can manage that risk with hedges and whatnot. But the whole reason why I put it into a reserve fund is to not do anything with it. I’m not trying to leverage more when I put it into the reserve fund. What I’m trying to do is just be reserved in my strategy. If I wanted to squeeze out yield, there’s so many other things I could do with it. It’s just something that I want to put on the site and do nothing with.

Tripleyak 1:01:26
Do you mind if I ask one more quick question? I appreciate it.

LUNAomics 1:01:29
Yeah, yeah, yeah.

Tripleyak 1:01:31
So I was hoping you could speak a little bit more about your thoughts on how volatility will increase or at least that’s how I’m understanding. But the thing is over time, because the supply of LUNA continues to decrease, at some point there’s going to be a supply shock, and you’re seeing… And correct me if I’m wrong, but you’re seeing kind of volatility stay high, or potentially even get higher? And just how do you think about that? How do you think about positioning yourself to where you can benefit from that? Or is it just all about managing risks, so that you’re there for the next upswing because it’s going to be really significant compared to the previous upswing?

LUNAomics 1:02:13
Yeah, that’s a great question. And volatility is the thing that drives markets. With the supply shock that’s coming, and you can see Anchor burning, we’re burning… Or not Anchor. We’re burning UST at capacity, and they’re going to increase that capacity, I don’t know when, but they’re going to increase that capacity. I don’t know how much UST we’re going to be burning. LUNA is going to go through a supply shock. I mean, it’s so easy to see that that’s what’s gonna happen. And when that happens, you’re gonna see jumps to the upside. We haven’t even… Cephii talks about we haven’t even seen the FOMO yet. And that’s gonna happen, you’re gonna see the same move that we saw in in Bitcoin, in Ethereum, in Binance. When Binance… The thing that pushed Binance up from $11 to $300, in a couple months was that CZ said that he was going to burn a whole bunch of BNB tokens. It was the largest burn… Up until that point, it was the largest burn in crypto history. And so that created FOMO, and it just shot up from $11 to $300. BNB has nowhere near the quality of projects that LUNA has, and LUNA is not burning everything at one time, but it’s a consistent and massive burn of LUNA. So at some point, people are going to understand what’s going on, and there will be FOMO and it’s gonna… If Binance could go from $11 to $300 in a couple months, you’re gonna see something pretty crazy with LUNA. But on the flip side, what will happen is because of the low liquid circulating supply, any kind of demand on the upside or downside is going to push the price around much more easily just because there’s less of it in circulating supply.

LUNAomics 1:04:12
And so it’s it’s pretty easy to see what’s going to happen that as the price goes up, because people are FOMOing in, they’re going to use their borrowing power on Anchor to max out what they’re able to borrow and they’re going to buy more LUNA. When that happens, it’s gonna push the price up even more. And so we’re gonna see this volatility to the upside, because it’s so easy to borrow and people don’t know how to borrow well. And then what will happen is the flip will happen that when the price goes down, people who are leveraged are going to be forced to sell and that’s going to put selling pressure to the downside in a massive way. And so you’re going to see these swings that are huge to the upside, then huge to the downside. It’s just what will happen. And so that’s where your average true range becomes really, really important. You have to… Say you’re holding 100… And maybe I’ll just transition a little bit into delta now. But say you’re holding like 100 LUNA, right. And so your delta risk is $100 per point fluctuation of LUNA. So when LUNA goes up $1, you’re making $100, when LUNA goes down $1, you’re losing $100, right. But say the average true range of LUNA… In the beginning of 2021, it was only $1 per day over a 14 day period, averaged out, the moving average. That means that if you’re holding 100 LUNA, your risk is 100 to the upside, 100 to the downside every single day. Once we hit May, that average true range jumped to $4. So now even though you’re holding only 100 LUNA, now your risk is $400 per point per day, even though you haven’t changed your position size.

LUNAomics 1:06:04
What happened at the end of November was very interesting, because in a couple of days, that average true range, 14 day average, it jumped from 4 to 8.59. So it doubled. The average true range, the amount that LUNA fluctuated per day went from $4 to $8, in just a matter of a couple of days. So if you are holding… So for me, I was holding 77,000 LUNA. 77,000 LUNA, that means for every point, I’m making or losing 77,000. When it was at an average true range of $4 per day, then I was… It was about a quarter of a million per day that it was fluctuating. But when it jumped to $9 per day, now it’s close to a million dollars that my account is fluctuating every day. And that’s fine when the price is going up. But when the price goes down by that much, it becomes a really large part of your portfolio super fast. So the risk just goes off the charts if you’re not watching the average true range.

LUNAomics 1:07:14
I met with a couple of guys who do spreadsheets, Ed Plaskow’s one, Karen’s another. And he does the Monte Carlo simulations where you can run 10,000 simulations with a estimated volatility of LUNA. So he actually took out all of the events that contributed to the May downturn of last year. So when I say events, it’s like price action. So you have price action, you take all that price action, it gives you a certain volatility, you can input that volatility into a program, and then run this program to see with that volatility, what the price action could be. And then take the standard deviations of where price will be at the end of the year if you anticipate a certain appreciation of price. What was super interesting with those 10,000 simulations was that the simulation that came back, and they were at the very ends of the curve, it’s like black swan events that there wasn’t a lot of events that happened in this way. But what was really interesting was that there, even though you’re anticipating a 10x return, there were instances where people could have lost money. And the way that that happened was, if the price went up really fast, and then crashed down really fast, that it affected the person’s account to where they actually ended up in the negative. And that was very… One in 10,000 events. But what it tells us is that the faster that the price goes up, the risk increases exponentially. And so when… And I really believe that LUNA, the price is going to go up, that’s when you got to be very, very careful with your leverage. And so my strategy of always being at 30% LTV is not going to be a very good strategy when we start going up by leaps and bounds and the volatility increases. That also means you’re gonna have to be pulled down by a huge amount.

Cephii 1:09:43
Shigeo, before you go too far, I might mention there’s a little bit of like time sensitive information people might want to know right now. I just borrowed a sizable chunk using Anchor to buy LUNA, both because the price is sitting around $76 since no one’s noticed while everyone’s chatting it’s had a bit of a drop. But also the LUNA to bonded LUNA arbitrage is right around 3.1% in case anyone wants to take advantage of that. So I think I bought LUNA at like $73, essentially, just now with this… So I started escalating the amount of leverage I’m using on the way down just like we’ve been talking about. But just wanted to sort of point that out, just while I’m doing it so you understand what’s happening.

LUNAomics 1:10:27
Awesome. Thanks, Cephii. I’m looking at my account right now and seeing where I’m at.

Tripleyak 1:10:33
Yeah, while you do that, I’ll just say, thank you so much for talking about this, because I think this is so important and non-intuitive for people who have never invested in something as volatile as LUNA. And that, for me, what this is kind of making me realize is that I need to be paying attention to LUNA when it’s going up almost more than I’m paying attention when it’s going down, especially when the supply shock or the supply squeeze hits because the risk increases the faster LUNA moves, in both directions, but specifically up if you’re leveraged.

Cephii 1:11:14
I would mention that part of my… Not derisking process, but whatever you want to call it is, so from when LUNA was at $40 to now, I have been extracting collateral as my LTV is dropping as price is going up, small quantities at a time. Again, looking at the average range and having an intuition of where the new bottom is likely to be, and I’m extracting that, and I’m going ahead and burning that bonded LUNA so that I can participate in the arbs again. So, part of how I’m derisking is over a three month period, if I do three 2% arbs, then I basically got 6% more LUNA with those parts that I’ve been able to arb. And so that actually helps, because then now I have additional collateral three months from now as well, to manage LTV if necessary. So it’s like a mixture of strategies can be used to kind of continually improve your collateral position. That’s the way to… Maybe that’s the best way to think about it.

LUNAomics 1:12:21
Would you ever… This is Cephii, would you ever… So whenever you do that arb, do you always put it back into the burn mechanism? Or do you wait for a better rate?

Cephii 1:12:35
Not all… No, for example, right now, because since there’s a possibility of theoretical downside, I want to be able to have my bonded LUNA available for providing as collateral for the coming week if necessary, right. That’s one reason to not just burn immediately. The second reason would be is let’s say… By the way, my LTV right now, I have enough bonded LUNA available to go all the way to like $47, without any of my other… Without doing anything fancy. So I’m fairly low risk, okay, so just… Everyone needs to keep that in mind. But as the price goes down, I hold on to the bonded LUNA because then I can additionally add that to lower LTV even further. But if we get to the point where LUNA is above $100, then I’ll remove all of this collateral, and then just burn it all again, and sort of start all over again. So yeah, Lucky, and I were talking about this before, we’re always having some of our collateral participating in that sort of arbitrage trade. And then more recently, the opportunity for some of the LUNA in the Prism yLUNA farm is pretty good, too. So there’s a couple of things one could be doing right now that are high yield, but managing that bonded LUNA to maximally have it available for LTV management, if you’re playing this game, I think is important. And like Shigeo said, the biggest intuition has to be what is the worst case downside likely to be, you don’t want to go to ridiculously low theories like, “Oh, LUNA is going to go to $10.” Because it’s just no reason to believe that would happen. At the same time you shouldn’t believe by next week LUNA is going to $1,000 either, that doesn’t make any sense either. There’s a range that’s rational a you develop that intuition, really, with some mixture of understanding crypto, understanding market psychology, and all of that. But I think what you’re saying is correct that to me, anything down right now close to maybe $55, $60 is a steal again. And I think I’m escalating more substantially at these levels. If I can get buys within the $60 range again, I’ll be much more aggressive and probably use substantially higher, exponentially higher, leverage than I am now at this moment. That’s sort of my theory here.

LUNAomics 1:15:06
Awesome. Thanks. So with the arb, you guys are constantly going back and forth between LUNA-bLUNA and not with the burn mechanism. But whenever that spread, either widens, or narrows, is that correct?

Cephii 1:15:22
No, you can do either one. So if you have bonded LUNA, you’re holding it to manage your LTV. And you see a situation where, “Hey look, the Astroport range between LUNA and bonded LUNA goes down,” you could go ahead and swap it back to LUNA at that moment and take advantage of that. Some people do that. The other thing you can do is just simply… If you don’t think you need it for collateral, you just burn it immediately. Because you don’t really know exactly what the time gap is going to be for the gap to narrow, whereas you can be pretty sure mathematically that your LUNA is going to be free within 21 to 24 days, so at least you know. But a lot of that is totally dependent on how much borrowing capacity you need, right. Because if it’s stuck in Burn, you’re not going to have it available.

LUNAomics 1:16:12
Right, right, right. So it’s really based on where you are specifically in your account, how much risk you have on LTV, whether or not… And whether you can be safe without that bLUNA to throw it into that 21 day hold to get that 1:1 again.

Cephii 1:16:33
Precisely, because I’m not a big fan of having to manage my LTV by selling. Let’s say I bought some LUNA at $80, I don’t really want to sell it at $70 at a loss to manage LTV, when I have all of these free arbs that essentially make money without having to take any price risk in a sense, right. So that’s why I’m in that camp where I don’t feel like overdoing the looping and such, right. So I do have a lot of excess capacity as a result. But I feel like you can sleep better at night if you don’t have some huge amount of money that’s gonna just vaporize on you. [chuckle]

LUNAomics 1:17:14
Yeah, yeah. Awesome. Thanks, Cephii.

Tripleyak 1:17:20
Hey, LUNAomics. Can I just ask one follow up question about the volatility?

LUNAomics 1:17:24
Yeah, sure. Then we’ll jump into deltas. I want to cover the deltas as soon as this question ends, and then open that up for questions, and then we can close this Space.

Tripleyak 1:17:36
So with the volatility increasing on the upside, what drives the volatility… So the volatility is increasing to the upside, but it’s still very volatile, both to the upside and the downside. But we’re all probably assuming in this call, that the volatility will be more to the upside than to the downside. So let’s just say for example, LUNA is at $50, it goes up to $100, it corrects down to $60. It goes up to $110, it corrects down to 70, right. And it kind of just has this… Or maybe, no, it would go up to $120, it comes down to $70. And then it goes to $140. And it goes to $75, or something like that, right. What is causing, in your opinion, the rising price floor of LUNA. So even though it’s still volatile, it’s not symmetrically volatile, right. It’s not like there’s an upper… Right. And so what is causing that? Is that new adoption coming into the space? Or is there some other mechanism or… Can you speak to that?

LUNAomics 1:18:39
Yes, I would go back just a little bit. I wouldn’t assume that we’re going to increase in a predictable way, like how you just said. It can go to $100, and then we would say maybe it will go down to $70, it could easily go down to $50. I mean, if you look at Ethereum, Ethereum is a perfect example. If you look Ethereum’s history, there was massive swings of way more than 50%. That is because markets never do what you anticipate it doing. And so people will plan for exactly like what you said, “There’s this upper skew, so I’m going to leverage myself to this certain price point.” And then it will drop to a place where a lot of people anticipate that that’s where the floor is, and then some event happens or some whale wants to push it down further to a place where he knows that the market sentiment… Believes that there’s price support, and he knows that if he pushes it a little bit lower that people are gonna freak out and sell so markets are very unpredictable. They always do what you don’t think they’re going to do and that’s what creates these bigger price swings because it does something that’s unpredictable and people freak out in the response. So the volatility, if it goes up to $100, and people are irrationally exuberant at $100, they’re going to leverage thinking that it’s going to go to $200, which it very well could go to $200. And then when it goes to $200, people are like, “Oh, it’s gonna go to $300.” And they start leveraging, thinking that it can only drop down to $100. But when it drops down to $100, where they think there’s a price support, then it drops down to maybe $70 and people start selling, and it just creates this cascading effect to the downside till everybody’s wiped out. And then the buying can start again, that’s just how markets cyclically work. So the only way to really guarantee that you’re going to be around when LUNA hits $1,000, $10,000, is to be pretty conservative, and to understand market psychology, know where certain levels are, protect yourself so that you’re never liquidated, understand deltas and average true ranges, those are some pretty important things.

LUNAomics 1:21:03
To your second question, what’s creating the upward skew is adoption. People are adopting UST from different areas. So that’s the reason why I bought LUNA to begin with was because I was using Mirror, every single day I was providing to the liquidity pool. And I was realizing that every time that I’m using UST and the more mirrored assets that are produced on Mirror, other people are gonna want exposure to gold, or to silver, or to Facebook, or different Mirror assets from around the world that can’t get it in America, the more that that demand increases, then you’re going to have this demand for UST which is going to burn LUNA. So now it’s not just mirrored assets, it’s banking, it’s leverage protocols, it’s spending on the Alice card. So this adoption of UST… And now with the anticipated regulations of centralized coins, the two top centralized coins, or the two top stablecoins are USDC and Tether. And so both of those are centralized and have a ton of problems with both. And regulators, when they start clamping down on these stablecoins, like Tether who… If they really regulate Tether, and they look at the balance sheets, and the corporate paper that supposedly backs all of their coins, they’re going to be… It’s not going to be pretty for Tether. And I believe people are going to naturally start moving toward stablecoins that are decentralized, UST being the main one. It’s already at number 14 in market cap. It’s going to be in the number 10 in the next month or so I think. And you’re gonna see UST and LUNA in the top 10. And really a good metric of market cap is UST and LUNA are the same coin, they’re just separate functions of the same coin. So the actual market cap of LUNA-UST is over $40 billion.

LUNAomics 1:23:16
So anyway, that is what I believe is producing the upper drift and the floor of LUNA is in increased demand of LUNA, by all of these protocols and whatnot, and to increase in the demand for UST that burns the supply of LUNA. And you have both of those things working together. And it just creates… And staking incentives, there’s more staking incentives now of LUNA where it’s decreasing the circulating supply. Nobody wants to let go of their LUNA, and that’s going to continue. So the more people that buy it, that stake it, and you have a burning because greater demand of UST it only has up to go. So over the long run, I can only see LUNA going up, but on the way there it’s going to be really volatile and anybody using leverage should be careful.

LUNAomics 1:24:13
Okay, so real quickly, delta, I kind of talked about what delta is, It’s your risk per point fluctuation of your underlying asset that you’re using. So in our case, it’s LUNA. So your delta risk is how much LUNA you’re holding. So if you’re holding $1,000 LUNA, that means your delta is $1,000. So for every point that LUNA goes up, you have 1,000 LUNA that you’re making, for every price that LUNA goes down you’re losing $1,000. You have to combine your delta risk with the average true range, how much does LUNA fluctuate. And when you combine average true range with delta, that gives you your total risk to the upside or downside, in proportion to your delta. So if you’re holding 1,000, and your average true range right now for LUNA is eight point… Let me look at it right now. It’s 8.52. So because average range is 8.52, if you’re holding 1,000 LUNA, your account is fluctuating $8,500 per day. That metric is really important to understand compared to your account value.

LUNAomics 1:25:44
So if you have $100,000 equity in your account, that means that your account now is fluctuating at 8.5% per day, rule of thumb in investing or in trading is that you don’t want to have delta risk of your account of more than five to 10%, like 10% of the top, 5% is pretty conservative. And the logic in that is that if your delta risk is 5% of your account, then the market has to move against you 20 days in a row before you’re completely wiped out. If your account is 10% delta risk, then the market has to move against you for 10 days in a row for the complete range, average true range, for your account to be wiped out. So 10% delta risk is pretty… That’s where I would kind of live in traditional trading is between that 5%-10% mark. Once I got into crypto, I didn’t really care about it because I thought that… Well, for one, with LUNA it was only $1 average true range. So my risk was really just $1. And then it jumped to $4 and I can kind of manage it. But when it jumped up from $4-$8, that average true range actually doubled my risk profiles for my account. So between November and December of 2021, my account was fluctuating about 10% per day, which was very manageable. At that top, it jumped from $4 average true range… And you can get this from TradingView. If you have a TradingView account and you set up your account, you can go to indicators, just type in “average true range”, and you can add that to your chart and it gives you the average true range of whatever you’re looking at.

LUNAomics 1:27:57
So right now LUNA is at $8, it jumped from $4 to $8. So what that did to my account risk profile is I was at around 10% that my account would fluctuate per day. And all of a sudden, overnight, my account started fluctuating from 10%-20%. But we were at all time highs. So when you’re at all time highs and your account is fluctuating that much, it’s not that big a deal. What is problematic is when your collateral starts dropping, and it starts dropping quickly, and that average true range stays the same. So what happens to my profile at that point is that I have my account fluctuating at 20%. But as LUNA starts dropping, that 20% increases to 25%, 28%, 30%, 35%. And it was right around the 30% mark that I see my total account, which is in the millions of dollars fluctuating at 30% per day. That is not good no matter where your liquidation level is at. So yeah, I might not get liquidated till $40 or whatever, or 30 something dollars, but that doesn’t take away from the fact that my account is fluctuating at 30% per day. And what that tells me is that if we go in the wrong direction for just three days, I’m at risk of ruin. So my liquidation level is not the most important risk metric at that point, it’s what my deltas are and what the average true range is of LUNA, because I don’t ever want to get to a place where I’m at the risk of ruin.

LUNAomics 1:29:36
So I started getting to the 30% fluctuation of account right as Russia jumped into the Ukraine. And it was very… We could have gone to war, things could have been way worse than they were. I looked at… I think it was Rebel Defi and he was like, “I made the wrong mistake because I took off some LUNA right at the wrong time.” And I told him, “You made the right decision in taking off risk at that point, because I’ve seen markets plummet way more under a certain level.” And if we had kept going down, we could have easily gotten to the $30s, maybe $20s. It could have happened. And so even if there’s a 3%-5% that that happens, and you’re sitting on an account that’s fluctuating at 30%, you’re really risking your entire future. And you have maybe a 3%-5% that that is the risk of it, but still, the risk is there. I would just not want to be in that position at all, especially with the future of LUNA and what’s going to happen. So I took risk off the table when we were ready to go to war with Ukraine, pulled my position down, and I’m at a very comfortable LTV. I lost going down, but I am around to trade another day, have healthy cash flow, and know that this is kind of what I’m going to do till we hit $1,000 and $10,000. So that’s kind of understanding delta risk, using it with your ATR, your average true range, measuring the percent fluctuation of your account as calculating your days to ruin, and then how big you are in your account against those metrics. So going forward, I think that’s really, really important for me, and just wanted to throw that metric out to the community to be aware of, because that volatility is going to increase. So any questions around that? I just lost Jaser as a co-host. So I’m going to try to figure out how to do this.

LUNAomics 1:32:03
Gustavo, are you there? Okay. Anyone else have a question?

Tony Thomas 1:32:07
So, I have a… This is Tony. Thanks, by the way for holding this session, it’s super informative. I have a quick question on do you ever consider… And you touched on it a little bit, extreme low probability, but a highly negative event, what sort of actions would you take in such a scenario where the price is dropping, or a bank run type scenario? Have you taken that into consideration specially considering there’s borrowing involved?

LUNAomics 1:32:42
Yeah, I would just get smaller. That’s the best way to de-risk is just get smaller in your position size.

Tony Thomas 1:32:50
Gotcha. Thanks.

LUNAomics 1:32:52
Yeah. Yeah, and the thing is that it hurts when you do that. If you are leveraged, and you have a position that is borrowed, I just look at it, like, “I borrowed it from the beginning, so it’s not mine to begin with, I’m just gonna let it go.” And just get smaller.

Cephii 1:33:08
Tony, my answer that would be that I’m now only borrowing actually off of maybe 25% of my LUNA now. So at just like Shigeo, my portfolio has grown substantially over the last year and a half. So I’m less interested in taking really, really extraordinary risks, and maybe more interested in capital preservation, and also taking my UST and maybe buying some of the new projects in tiny allocations for more longer term on those as well. So that’s kind of my take.

Tony Thomas 1:33:47
Gotcha. No, thank you. Thank you both for that insight. So, related to that, obviously now I’m a huge believer, my Twitter feed is surrounded by LUNA optimists. Do you guys kind of have your radar on on “hey, what could go wrong”? I mean, I guess do you listen to the haters, especially folks who may provide some insightful hate as opposed to just pure hate, right.

Cephii 1:34:13
Well, shit. I think both of us have already been through what could go wrong. [chuckle] Like we were there last May when Anchor liquidations were wicked and not only did price dumped to the worst it ever has, but the entire crypto space was correlated and doing the same thing and danku’s laughing over there, all of us sort of already did that. And a lot of the kind of FUD that was around at that time has been somewhat addressed since then. And improvements in Columbus-5, and improvements in Anchor Protocol, improvements with Kujira added in there, so that the severity of liquidations is not quite as bad. And not only that, but we’ve learned all of these other tricks of the trade, so to speak, along the way. And we have de-risked in one way because many of us have way more LUNA now using arbitrage strategies, so that we have more that we could potentially lose without worry, sort of like house money to some extent. And then also the new Bitcoin reserve that can be used in a money market situation, which they’ll announce more details in the next few months, but can be used to additionally preserve the peg using an external mechanism just to be even more sure about that. I think there’s so much UST and LUNA locked up in different activities. I just don’t think it’s rational that a bank run, or whatever you want to call it, would happen that quickly or that easily now. So the proportion of UST that would be involved in a “bank run” is sort of dropping by the day, is how I look at it.

Tony Thomas 1:36:06
Got it. Yeah, and I get specific to Anchor though, do you guys think about, hey, there’s obviously a lot more demand on the deposit side, because it makes sense to most normal folks outside of crypto, whereas the concepts of liquidation… If I go get a car loan, and if the value of the car drops, it’s irrelevant, because I… Let’s say I got a five year loan, I’m paying the monthly amount as long as I pay it. So the concept of liquidation of a volatile asset is not necessarily the norm, right. So is that… Do you concern yourself about, hey, the deposits will continue to go up, especially with Alice finance and so forth coming on board, but then the borrowing side has to compensate for the equation to balance. Is that something you take into account as well?

LUNAomics 1:36:59
One of the things that they have talked about is Anchor version two. And right now I don’t understand every thing about it, but I think the big idea of it is right now the only money that’s going into the reserve fund is from the collateral yield… From the yields from the collateral. And what they’re going to do is they’re going to allow the yield that you put on collateral to fund your Anchor deposits. So I guess the protocol is not going to be the one to take your yields from you, and then use that to pay the collateral, it’s going to come from other sources. And then they’re going to be opening up more vehicles of collateral like bSOL, and bDOT, and other collateral that people can post and borrow off of. I think long term that 20%, they say that that’s unsustainable, and it will probably drop to 15%. So what they’re doing is they’re providing a service to gain market share. And I think the Terraform Labs, they have enough in their war chest to fund that reserve, to take a pretty big chunk of market share, to a place where once they have that market share going that they can drop it down to 15%, between 10%-15%, which is very sustainable, and it will still be very competitive with anything that’s out there.

LUNAomics 1:38:36
So I think the long term game plan, it’s kind of like the arguments that I hear about that Anchor Protocol is very similar to what I’ve heard in shareholder meetings of Amazon in the early days. Because the shareholder meetings at Amazon in the beginning days where this company is not making any profit, it’s not profitable, and so because it’s not profitable, it’s not going to be solvent in the future and what are you guys doing? But Jeff Bezos had a vision that was a little bit bigger than everybody else’s, and he was dumping money into expansion. And his big picture vision was market share. He just wanted market share because he knew once he had market share, he had a moat around his business that would be almost impenetrable by any other competitor. And so he put money in on the front end to not be profitable, and not to be solvent, but to gain market share, and then realize that once they had market share, they could just dominate the marketplace. I kind of look at Anchor as implementing that same strategy that they have the funds to do it, and they’re going after the market share of every… They’re going after Venmo, Cash, traditional banks, and the greater market share that they get, there’s going to come a point where that becomes a moat around Anchor that makes it very hard to compete with. So I think market share is the goal, it’s not profitability right now.

Tony Thomas 1:40:08
Got it. Thanks, guys.

LUNAomics 1:40:10

BadCrypto Bandit 1:40:11
Hey, LUNAomics, BadCrypto here. I just wanted to ask you a quick question. You put out a video about your strategy a few days ago. I think it was on Screencasts. I think it’s password protected now. Is that for a reason?

LUNAomics 1:40:26
Yeah, I’m just editing it. I’m gonna put it back up. Yeah.

BadCrypto Bandit 1:40:30
Okay, cool. Yeah, ’cause I watched five minutes of it, and I came back in the evening the other day, and I’m like, “Oh, no, it’s gone.”

LUNAomics 1:40:36
Yeah, no, I’m gonna put it back up. Yeah.

BadCrypto Bandit 1:40:38
Okay. Awesome. And, again, thank you, both of you guys, LUNAomics and Cephii. Because of you guys, I’m a LUNAtic now, converted a couple of months ago. And it’s been great. So thank you so much.

LUNAomics 1:40:50

Full Time Dad 1:40:52
Hey, guys, it’s Full Time Dad here. Firstly, yeah, obviously, thank you very much for hosting these sessions. And likewise, I’ve been a LUNAtic for the last few months as well, due to your influence. I don’t really have a question per se. It’s just more of a feature recommendation I just want to put forward about the Anchor Protocol… And with you guys being kind of key influencers in the space… Hello, can you hear me?

LUNAomics 1:41:21
Yeah, yeah, go ahead. Yeah.

Full Time Dad 1:41:24
Yeah, so the first one was just… Yeah, so just around the whole take, when you take a loan from your LUNA, what I tend to do, I try to get as close to the 75% LTV ratio as close as possible, provided that I’m keeping an eye on the actual price of LUNA itself. But what I think that Anchor could actually do a much better job of is making much more visible about what your liquidation price would be, because right now in order to remind myself what that liquidation price point is, I have to go into the Anchor Protocol, and fiddle around with the LTV scroll bar and give it a nudge for my liquidation price point to actually show up.

LUNAomics 1:42:09
Do you have bETH as well?

Full Time Dad 1:42:13
No, I don’t I just use…

LUNAomics 1:42:15
If you don’t have bETH, you can look at the bottom, you know where you provide, and it will show the price of LUNA and right under the price of LUNA it will show your liquidation price.

Full Time Dad 1:42:25
Alright. Okay.

LUNAomics 1:42:27
Yeah. So you can see your liquidation price there.

Cephii 1:42:30
I would say the reason why Anchor can automate all that for you is because it won’t be possible to have such a simple interface when there’s multiple collateral types. So they’re not adding that convenience feature that you and I both want only because the interface won’t make sense when there’s lots of different types of collateral people are deploying.

Full Time Dad 1:42:54
Okay, okay, that’s…

LUNAomics 1:42:56
One thing that I do think that they could add is a little LTV on the side of the percent borrow, I think that would be really helpful. Where it shows a 75% borrow, and then right next to… In parentheses, 60% LTV. I think that would be pretty helpful. Any other questions?

Full Time Dad 1:43:16
Yeah, well, another point I just wanted to raise was if you know if there’s a mechanism… I don’t know if it’s been built out there or perhaps there’s a feature within Anchor itself, it’s just related around the LTV again and managing it, when I’m getting close or when I’m feeling a little bit uncomfortable with the price of LUNA going down, I’m getting getting higher in my LTV ratio, I have to transfer money from my Earn and put it back in to repay the debt from the bLUNA borrowing. So I would love it if there was some kind of automated feature that would do that for me some kind of auto-transfer mechanism that shifts money from my Earn to repay the debt on my bLUNA.

LUNAomics 1:44:05
That’s great idea. I think that would be really cool if there’s like a toggle switch where you could choose that. Yeah, that would be awesome. I’d love that.

Full Time Dad 1:44:12
Within like a threshold, so if I’m like 10% from liquidation then just take the money. It’s there already on, I Anchor just change from one bucket to the other. I’m just surprised that’s just not out there. If this hasn’t been spoken of, and if it has, my apologies, but I just thought… So if anyone from Anchor is working for Anchor listening to this, please take notes. Put it on your backlog and get in one of your sprints, please.

Full Time Dad 1:44:12
Well, Anchor has done an amazing job. They’re the best protocol out there, in my opinion, one of the best protocols out there. But yeah, those are cool suggestions for improvement. Very cool. Thank you.

Full Time Dad 1:44:56
Okay, that’s it. Thank you.

LUNAomics 1:44:58
Awesome. Is it… Let’s see. I don’t know who was waiting first. Maybe we can jump to Tony. Tony, did you ask a question?

Tony Thomas 1:45:09
Yeah, I already did. Yeah, I’ll let them…

LUNAomics 1:45:12
So after you ask a question, it would be cool just… I don’t know how to…

Tony Thomas 1:45:17
Oh, I’ll do that. I’ll do that.

LUNAomics 1:45:19
Okay, cool. Cool. Let’s see. The legacy. Do you have a question? Okay, maybe we can go with Wall Street.

Wall Street Mastermind 1:45:33
Hey, LUNAomics. A quick question for you. So seems like in the most recent iteration of your strategy, you moved away from doing the LUNA-UST LP, which I know you used to be a big fan of and benefiting off the impermanent loss on the way down and things like that. So is there a rationale for just putting money in Anchor and not doing that anymore? Because obviously, the APR on that is higher, right.

LUNAomics 1:46:01
Yeah, it’s way higher. Actually, when I made that video and I plugged numbers into the spreadsheet and I saw how much money I was putting on the table. I thought maybe I should put at least some in the LUNA-UST pool. I probably am going to do that. It is the pool that I love the most, and with Mars… I don’t think I’m going to utilize the Mars Protocol to use it to borrow off of, but that’s a really cool utility as well. No, I like the LUNA-UST pool. I just was trying to get to a place where it was like maintenance free where I didn’t have to look at it. I’m living 100% off crypto right now, and then there’s my house remodel going on and a whole bunch of other stuff. So I just didn’t want to have to maintain something. And I was looking for what’s my highest return, lowest maintenance option that I could do so… But I probably gonna take, yeah, some of it and put it in LUNA-UST probabl soon. I don’t know, because we’re so low that as we go up, I’ll lose LUNA. So I don’t know, maybe I’ll find a point to jump back in. I’m not sure.

Wall Street Mastermind 1:47:11
Got it. Okay, cool. Thank you.

LUNAomics 1:47:14

Wall Street Mastermind 1:47:16

LUNAomics 1:47:17
Hey, Legacy, what’s going on?

TheLegacy 1:47:19
All right. You know you see on crypto Twitter all the time about taking profit? Do you ever have this conundrum in your head, what do I do? Do I… What is the point of all of this? Like, are you… Yeah, or the strategy in terms of the long term because most people are in crypto to make money. But really, in reality they’re making they want to make as much fiat as possible to spend in real life, right. And obviously, the kind of hardcore crypto people are like, “Crypto is the way forward we’re going to use crypto to pay with.” And I’m still struggling in my head like, “What do I want? What is the point of all of this? To stack as much LUNA as possible and then to sell it for US dollars?

LUNAomics 1:48:04
No, no, no. I mean, for… I think a lot of people in here understand that long term, the US dollar loses value, long term LUNA and different cryptocurrencies are going to increase in value. So you’re just… You never need… I don’t look at a difference between USD or crypto and fiat, it’s… Whenever I need to spend it, I’ll just move it into Fiat and spend it. So I don’t ever want to sell LUNA or “take profit”, especially when you can just park your LUNA borrow off of it, and then use that capital to create passive income. I mean, I’m making about $2,000 a day in passive income doing absolutely nothing except parking my borrowed money in Anchor Earn. And that $2,000 a day I can use to buy more LUNA, I can use it to enter liquidity pools if I want to, I can just let it sit there and grow, or I can shoot it over into my Bitpay card and spend it. So I’m never gonna… I mean, if LUNA is that useful for me right now at $77, why in the would I sell it at $100 when I can just use the same strategy, and instead of making $2,000 a day, make like, I don’t know, $5,000 a day? Why would I sell it? It’s like the goose that lays the golden egg. So to sell it, it’s like killing the goose, giving that goose to someone else just because I want an egg for a day. I’m just not going to do that and anybody that understands the ecosystem or understands LUNA, nobody’s going to be selling their LUNA because you can generate passive income from it. So I hope that makes sense. If you want to understand it more in depth, you can check out danku’s channel, YouTube channel, you can listen into Cephii’s Spaces. You can jump into my pinned tweets and check out the pinned tweets that I have. It goes step-by-step through how you can use LUNA to generate passive income and never have to sell it.

DGvest 1:50:12
Hi, can I ask a question?

LUNAomics 1:50:15
Yeah, yeah.

DGvest 1:50:17
Thanks for…

LUNAomics 1:50:18
And then we also have Cephii on here, we have danku on here. I don’t know who else we have on here. But I’m sure they’re open to you asking them questions as well. It’s great to have them on.

TheLegacy 1:50:30
Appreciate the awesome all the way.

LUNAomics 1:50:31
Yeah. Okay. DGv, go ahead.

DGvest 1:50:34
Yes. Yeah. Someone was on earlier and mentioned that they had LUNA coming off out of staking from I’m kind of in similar situation, I have a bag of LUNA that I’ve done nothing with, just looking at all the different strategies, I’m looking at danku’s channel, I listen to Cephii, and just trying to figure out what I wanted to do. And I’m at the point where I think I’m going to kind of follow one of your strategies. One thing that is never really been clear to me, on the Anchor Borrow, when you get Anchor rewards, you’re getting rewards in Anchor token, correct?

LUNAomics 1:51:12
Yeah, that’s correct.

DGvest 1:51:14
What are you doing with it? Are you then selling those into UST? Or are you just hold onto those and like, Anchor was up a lot over the last week now it kind of tanked again, but what are you doing with that? Because that’s how they’re calculating your net APR, right. They’re saying we’re charging you X to borrow, we’ll give you Anchor rewards that are worth this based on Anchor’s price today, and that’s what the spread is. But that price is constantly changing because Anchor is moving. So the only way to lock in that spread to me would be to sell at that moment, my Anchor into UST, then now I blocked that spread in. Is that what you’re typically doing? Or are you just holding Anchor, or are you a mix?

LUNAomics 1:51:51
Yeah. So I mean, you can do whatever you want to do with that, if you want to lock that in, you can sell it for UST and park it in Anchor Earn and make 20% off it. If you anticipate that Anchor is going to drop, then that’s probably what you want to do. If you want to hold Anchor long term, you could take it and throw it in governance and make money staking it. You could combine it with UST and throw it in LP and make even more through that, or park it on Astroport. There’s so many different things you can do.

DGvest 1:52:25
And that’s why you talk about spending the reward, that you play with the rewards, you don’t play with your… I got it. Okay.

LUNAomics 1:52:31
Right, right. You don’t play with your borrowed money. You use your borrowed money to create cashflow. And then with your cashflow, you can do whatever you want with it with no risk, because it’s not your borrowed money.

DGvest 1:52:43
Yeah, yeah. Thank you. Thank you.

LUNAomics 1:52:46
Yeah, Gustav, did you have a question? I think he’s waiting for…

Gustavo Acosta 1:52:51
Yes. Yes. Yes. Sorry about the disconnection there. So pretty much today, I had my little brother help me with pulling out of my liquid… I kinda got liquidated on Mirror Protocol. And so Anchor has been really easy to use, do you have any… Because Mirror Protocol was very buggy. We had… To pull out it took three times as long as it was to put in the money. I borrowed against… I loop, we looped it and then I borrowed against silver. So I just became a LUNAtic. I sold all my Ethereum except Ethereums that I’m holding long term in my Nexus, earning me a percentage. And so pretty much do you have any idea if Mirror Protocol is going to upgrade their site?

LUNAomics 1:53:45
I don’t, maybe danku or Cephii knows…

Cephii 1:53:50
I don’t think the problem here was Mirror, I think the problem today was that because of mixture of Fantom sort of having a lot of problems and people sort of running in and out of… People unwinding various positions. Then you also had Mars launching and such, and then you had Prism going on, it’s just a really just a heavy day. And on top of that we had a price drop so everyone’s trying to get in to play around.

Gustavo Acosta 1:54:20
So I appreciate that answer, bringing up Fantom. I was in Fantom and I had ended up pulling out of Fantom due to what we all saw. So when my little brother… He’s more of a degen, I’m more want to just get some passive income and be happy with getting that golden goose every day a little bit, every day, every day. Well, he just lost 20k because he was leveraged in the last sell off. So pretty much does anyone here also like Fantom? Because he said that it would just be working with Fantom but now I’m thinking maybe any whatever ecosystem where there’s Ethereum we’re using, would they have that same issue or do you think Aetherium would have worked more flawlessly then how today the Terra wallet was doing?

Cephii 1:55:12
Outside of today, Terra usually works quite well but just realize anytime in crypto you have massive volatility, there’s a lot… All the chains get a bit more congested. Ethereum is usually the worst during high congestion actually, where gas fees just skyrocket. So anyway…

Gustavo Acosta 1:55:31
And that’s what his point was. He said, “Well Ethereum just works quicker but their gas fees are just crazy.” And he said, “But it works.” And I was like, “Okay, well that made me a little…” I mean, I still love Terra LUNA, still love the whole ecosystem, the whole platform that they’re giving us, they’re giving us everything and I’ve been looking into those cards that you guys said, the Alice card, and then we got this other… I don’t know if anyone’s heard of Outlet.

LUNAomics 1:55:57
Yeah, Outlet. I can’t use Outlet in Hawaii, but I’ve heard good things about it.

Gustavo Acosta 1:56:01
Oh, you’re in Hawaii? I was living in Kauai for a while. Okay, and… Let me not go into that. That’s cool. That’s nice. Okay, I need to put my Kauaians on because the locals there on the west side, they can’t have any wallets. So I’m going to hopefully I’ll DM you and see what works, been working for you, so I can hook my guy.

LUNAomics 1:56:23
Bitpay works and Alice will work. So far I’ve used Alice.

Gustavo Acosta 1:56:28

LUNAomics 1:56:28
Yeah. works too but it’s expensive I think, the fees. And I just… I don’t know, I haven’t had a good experience with But I love Bitpay to be able to spend it, and also seems like Alice is way smoother, way faster because it’s hooked straight into the Terra ecosystem. So one thing that you could do is, just wait till you get an invite, and then make an iPhone group chat and everybody that gets an Alice beta invite they get two… When they open up their app, they get two invites. So what I’ve been doing with groups of friends is just making an iPhone group chat, you can make it up to 25 people…

Gustavo Acosta 1:57:11
On Alice?

LUNAomics 1:57:12
Yeah, no, no… iPhone group chat. So you need a person, just one person, to have an invite to Alice beta. And then once one person has an invite, you make a group chat of 25 people, or however many people you want. And then they give the invite code into the group. And then one person takes that invite code, installs it on their phone, they’re going to get two invite codes, and then they throw their invite code in until everybody in that group has Alice. Then you guys can push money around between people in that group. You can deposit into bank, out of the bank, so you can move money from your Terra wallet into the Alice app, and then spend it on the debit card when it comes out. So that’s how I’ve been doing it. Yeah, it’s super cool. It works like butter. Yeah.

Gustavo Acosta 1:58:05
Okay, so Alice is the play. Okay, and then I can put my guy… Over there at Kawai. Okay, cool. And then so is anyone else go into Metis or Rose or any of these, or are you guys just straight LUNAtics? ‘Cause I love this chat. I’ve heard other chats in the crypto network and it was just a whole bunch of demeaning and stuff going on. I see that you guys don’t put anyone down for not maybe knowing that ecosystem of Terra that much. So once again, I really appreciate you guys for that. So yeah, that was the question. Does anyone else here have some other… Not Fantom, but I think he calls it Rose or? There was another one that he said that a lot… I saw a green candle, a big green candle yesterday due to everyone getting freaked out about Fantom, it’s called Metis

Gustavo Acosta 1:58:59
Yeah, I’m not sure.

LUNAomics 1:59:02
I don’t… Personally I got sucked into the Terra ecosystem in the beginning of 2021. And it’s been a one way street for me. I’ve never gone back to pay the high gas fees and to have… I don’t know, everything is way more snappy with Terra. And it actually does everything that I want it to do. So there’s no reason for me to go anywhere else. I just have found everything that I need the Terra ecosystem. And maybe that makes me… I don’t know people say that if you don’t know anything else, you’re a maxi, but I kind of look at it as maximized opportunity. And if it’s doing everything that I want it to do, then I’ll just stay here until I find something better. But until today I haven’t found anything better.

danku_r 1:59:53
I’m sorry to cut you off. So today what I experienced was just pretty much just so much market volatility with Mirror Protocol, then. It’s not… And everyone and all the crypto platforms go through this? Would you know that question since you love your Terra LUNA so much?

LUNAomics 2:00:13
I mean, yeah, if you’ve been in Bitcoin, or Ethereum, or any of those networks for any long period of time, you’ll know that during market downturns or times of high volatility, you have to wait hours, sometimes six hours, for a transaction to go through, and then gas fees, you pay like $100 per transaction. So I don’t know…

danku_r 2:00:36
Can I quickly also add something? And LUNAomics, thank you for the shout out earlier, and always happy to listen to you and also seeing how many people are in here. It’s amazing. It’s always good to have the Terra community together. Two pieces that I would like to give to you, Gustavo, because you said that Ethereum is quicker also, even more in this volatility. So I think there is a big difference in terms of what is the chain itself doing, and then kind of what is the basically frontend’s doing. And today, we’re just seeing a few frontend issues. Why? Because most of the frontends are still running by one node, which is the official and open Terra node, right. This was the problem we have been seeing today. The Terra blockchain itself was running completely fine. And just to give it a comparison, the Ethereum blockchain is running on 13 transaction per seconds. Terra is far over 10,000, right. So in terms of speed, that has nothing to do with today. Today was really more off that this node, which is basically enabling all those frontend things, and it’s just because Terra is still a very young ecosystem, was overloaded, right. So it’s independent from the blockchain itself. It’s just in order to access this stuff.

danku_r 2:01:45
Gotcha. Okay. I appreciate that so much, because and a half weeks ago, I got that first drug of Terra LUNA. I had went on the protocol. I was like, “Oh my god, I’m sending 30k with 15 cents. And it’s going quickly,” I was like, “Whoa.” So then I transferred 5 Ethereum instantly, and then three days later, I threw 5 Ethereums for Terra LUNA at $50, didn’t know that was the floor, didn’t know anything. And then next thing you know, I’m here talking with you guys. So I appreciate you guys so much. I’m signing out. And once again, I really appreciate you guys for being hella positive. And I love Hawaii. I’m from the Bay Area. So I’m signing out. Thank you guys. Have a good day.

LUNAomics 2:02:31
Awesome. And with that, I think we’re gonna close up this space. If you did have a question, I want to be able to answer it. Everyone, there’s a lot of people here that can answer it as well. So on this Space, there’s going to be a Space recording of this, you can go ahead and put your question in there and then the LUNAtic community can chime in on that and answer questions. Also Orbital Command, if you join Orbital Command Discord, there’s a LUNAomics channel that you can jump into. There’s tons of people in there that are super helpful that can answer questions. And I’m sure any questions that you have will be answered. So I really appreciate everyone in this room. Thanks Cephii, thanks danku for jumping in. And we’ll probably see you in a Cephii Space in a couple of hours that will go for another five hours or something like that. Alright, thanks guys. I’ll see you soon. Bye.

Finn 2:03:34
Thanks for checking out another episode of The Ether. That was the LUNAomics Masterclass 6 and 7, Stacking LUNA, The Reserve Fund, Managing Deltas, and More. Recorded on Monday, March 7th 2022. This episode of The Ether was brought to you by Talis. Talis protocol is the NFT platform for independent artists on Terra. Talis helps to provide artists with the tools and resources needed to transition from traditional arts into the NFT world. With their V1 launch coming soon, Talis will be the place to see real world art reflected on Terra. Be sure to join their Telegram and follow Talis on Twitter for updates on their roadmap, validator, and other Talis news. Find your next favorite artist on This episode of The Ether was brought to you by Orbital Command, a community validator on Terra dedicated to educating, expanding, and promoting the LUNAtic community. Take advantage of their Terra Luna Intel Report on Telegram which brings you the hottest news and updates on all things Terra each and every day. Find it using the link in the show notes. You can also support their community efforts by considering them next time you’re delegating or re delegating your LUNA. Find out more at This episode of The Ether was brought to you by Luart. Luart is the first gamified NFT platform built on the Terra network. Luart provides a seamless minting and trading experience all while earning you rewards just for being a user. Be sure to follow them on Twitter and join the community in the Discord server for the most up to date news and announcements regarding all the hot new NFT launches, platform upgrades and new projects hitting the secondary marketplace. Are you ready to #PutYourHelmetOn and join the movement? Find out more at TerraSpaces appreciates the support from all our sponsors. For, I’m Finn. Thanks for listening.