Gate.io Blog Gate.io AMA: Are Highly Leveraged Investments Gone?

Gate.io AMA: Are Highly Leveraged Investments Gone?

09 October 16:31

[//]:content-type-MARKDOWN-DONOT-DELETE
Q: In recent months, cryptocurrency prices have fallen sharply, which severely hit the once "prosperous" cryptocurrency loan market.
A: Yes, cryptocurrency lending platforms and exchanges continue to spiral down in turns, and the development of this industry is shifting from the expansion of excessive prosperity to stabilizing market sentiment.

Q: Is it because of the recent black swan incidents?
A: Yep, hedge funds are the first to bear the brunt of Luna and TerraUSD's continuous breakaway from anchor price - Three Arrows Capital, whose failure has brought serious pain and loss to the entire crypto credit industry. Vauld, Voyager Digital, BlockFi and Celsius are most affected directly or indirectly.
![](https://gimg2.gateimg.com/image/1665302069204573129ama1.png)

Q: But the decoupling of TUSD from USD 1:1 is over. Why does it still have impacts?
A: The decoupling of TUSD from USD 1:1 and the plummeting prices of Luna occurred at the end of May, but its impact continues, causing a chain reaction in the world of cryptocurrency, which seems to have intensified. The first domino is Celsius, which has huge exposure in TerraUSD. 
Celsius said on June 13 local time that due to extreme market conditions, the platform would suspend all withdrawals, trades and transfers between accounts. On June 30, the agency said that it had hired consultants and was considering debt restructuring. As of May this year, Celsius has provided more than $8 billion in loans to customers around the world, with nearly $12 billion in assets under management.
![](https://gimg2.gateimg.com/image/1665302069326031181ama2.png)

Q: Has the credit crisis affected other companies？
A: On July 4 local time, Vauld, also supported by Coinbase, suspended withdrawal, trading, and deposit on its platform and explored potential restructuring plans. The company said that in the past three weeks, panicked investors had withdrawn nearly $200 million from Vauld, which then froze its operations. 
![](https://gimg2.gateimg.com/image/1665302069143663438ama3.png)
Q: In this way, as a symbol of excessive expansion, the crypto credit platform has become a typical example of contraction after the boom cycle.
A: Some people believe that the cold wave in this industry has led to the darkest moment for famous institutions in the field of DeFi, such as Terra, Celsius, Three Arrows Capital and Voyager, under the "liquidity crisis". Many factors have caused the current situation.

Q: Will this be the Lehman moment in cryptocurrency?
A: The crisis of crypto assets has exposed the fragility of its credit and leverage system. There are indeed views that doubt whether cryptocurrency has experienced its own "Lehman" moment. Some believe that Sam Bankman-Fried's "rescue behavior" is actually more inclined to the commercial expansion behavior in the bear market of the crypto market, in order to expand the business line of its crypto enterprises by continuously acquiring companies in this industry that are in crisis. 
![](https://gimg2.gateimg.com/image/1665302069424305809ama4.png)
Some don't agree with the so-called "Lehman moment" in the media. From the perspective of investors, increasing leverage itself is high-risk behavior. The common ground between Lehman Brothers and Three Arrows Capital is that the consistent venture capital strategy has repeatedly failed to meet expectations before the final event, leading to the final bankruptcy. In essence, it is caused by the main venture capital strategies in the general environment.
Others believe that the serial liquidation crisis caused by Luna can indeed be called a small "Lehman moment" in the crypto market, and the scale of funds affected is also at the forefront of the history of this market.

Q:  Does that mean that the highly leveraged investments are gone？
A: In a short time, the development speed of this industry depends on the choice of investors and the construction of the regulatory environment. Whether crypto technology can provide practical financial solutions in the future is the key to long-term development. 
From the perspective of long-term development, it is more conducive to the follow-up sustainable development to properly expose market risks and clean problematic projects. What DeFi needs is a more transparent and sustainable business model and investment strategy. Even if this may put the end to the highly profitable era of most products.

Don't forget to subscribe our YouTube channel： [https://youtu.be/XJuDCdVfqBk](https://youtu.be/XJuDCdVfqBk "https://youtu.be/XJuDCdVfqBk")

Đăng ký và nhận quà tặng$5600

Đăng ký ngay

Gate.io AMA: Are Highly Leveraged Investments Gone?

Chọn ngôn ngữ và khu vực

Chọn tỷ giá hối đoái