While waiting for a re-entry into bitcoin he found out about staking stable coins. He didn't understand how the UST peg was kept but like a lot of complex things in life he didn't question it. He knew the yield was abnormally high but chalked that up to the investors pouring money into the project trying to gain traction. He expected the yield to be lowered over time to normal market levels as investor money ran out and adoption occured.
He staked 250K and was earning approx $950 a week in yield. I spoke to him after the peg broke (0.33c) and he was confident that the peg was going to stabilise. I told him I didn't think that was going to occur and to exit on the bounce at a loss he was comfortable with. Suffice to say he ended up exiting UST at 0.10c.
To answer your question people get involved because they see opportunity, have a high risk tolerance and/or just don't understand the risks.
The Terra/Luna token was created by a South Korean company. These quotes are from reporting by the Financial Times:
“As the losses mounted, South Korean press reports linked the crash with a local surge in online searches for Seoul’s Mapo Bridge, a reputed suicide spot. Local police announced increased patrols around the bridge in response.”
‘“Do Kwon was like a successful cult leader,” said Donghwan Kim of Blitz Labs, a Seoul-based crypto advisory firm. “But now he’s the most hated man in Korea.”’
Venture capital lended an aura of legitimacy to the cult-like operation:
“Individual investors had been attracted by a scheme in which clients could lend out their terra for a 20 per cent yield. But hundreds of millions of dollars of investment in Terraform Labs came from venture capital firms including Galaxy Digital, whose chief executive Mike Novogratz would later acquire a luna tattoo on his left shoulder.”
‘“Commitments from some of the most respected funds is a testament to the shared vision of bringing decentralised finance to the masses,” Kwon declared in July last year.’
‘“About Won14tn-Won15tn was deposited in just one year after they began to offer the 20 per cent yield,” Kwon’s former colleague said. “Retail investors were lured by the high yield, while venture capital was attracted by the coins’ fast growth. The speed of growth was unsustainable.”’
15 trillion won is 12 billion USD. The scale of the scam was massive, and it’s possibly only the first crypto domino to fall.
Waiting for the moment where he reveals it was an adhesive tattoo.
Do Kwon is apparently in the process of launching Luna 2.0, he's been retweeting the listing of that crypto on several exchanges. I don't know if I should laugh or cry.
Think about all the crypto ads shown during the last Super Bowl. Think of all the people who watched those ads and decided to try out crypto speculation. Some percentage of those people were bag holders here.
Where were the regulators? Every investment advertisement in the real (non-crypto) world includes a "Past performance is no guarantee of future returns. Investing involves risk, including possible loss of principal." disclaimer, but apparently rules don't apply to crypto. It's hard to feel sorry for all of the "hodling to the moon in my Lambo" people but at the same time the government is asleep at the switch here.
But, in a more pointed answer to your question: yes. https://en.m.wikipedia.org/wiki/Reserve_army_of_labour
Obviously I’m just completely out of the loop. I’ve never seen ads for crypto so that’s probably why it seems so surprising to me.
https://en.wikipedia.org/wiki/List_of_most_watched_televisio...
They got all of these celebrities to shill for them using VC funding and the gains from their early adopters to fuel what must be massive marketing budgets. "Crypto" is a known concept now, even if an understanding of crypto isn't.
From the article it seems that people got persuaded by the seeming respectability combined with the promise of great returns. One of the people they spoke to invested via Stablegains.
They also mention how people had taken online investment courses which led to them getting into crypto trading.
That’s the most interesting part, almost sounds like a disguised sales funnel for crypto, because if they’d learned anything about investing from it they might realize much of it seems to good to be true.
Certainly you can make good money off crypto if you’re smart enough, many people do. But most people don’t it seems.
Luck almost certainly has a lot more to do with it than smarts. I can make lots of money playing the lottery too.
My thought too. People made money trading baseball cards and beanie babies, too. Doesn't mean they were necessarily smart, or that this was a sustainable way to get income.
What other options are there for people? House prices are insane, inflation is eating your savings, salaries are stagnant.
People are gonna scramble to whatever they thing is their way out even if it’s obvious scams at times.
> Many of the large firms that invested in and marketed this coin were able to exit before the crash occurred, escaping with massive profits. Strangely, some of these whales felt the need to share this in their comments following the crash. Pantera Capital CIO Joey Krug admitted that they had sold 80% of their Luna position before the crash. Furthermore, Pantera Capital partner, Paul Veradittakit, seemingly bragged that they had turned their $1.7 million dollar Luna investment into around $170 million dollars.
So the bag holders/true believers directly funded the market makers and manipulators.
There are a lot of suckers to exploit.
> 1400% yearly return
Pick one. For real, 1400% return must be some ponzi-level s*t. How the hell can it generate such returns if not by selling to a greater fool?
My advice in life to anyone about nearly anything is to "just take a win". A lot of people can't just take a win. They have to keep going.