I was feeling nostalgic about the video arcades that I grew up with this June holiday, so I brought my kids to Timezone at Causeway Point so they could play the latest generation of arcade machines. Initially, I thought the tokens were reasonably priced, as $30 of credits gave me $45 of tokens on my Timezone card. But once my two kids started playing with the machines, the credits began to deplete at a ridiculous rate, and we spent about $40 within 30 minutes.
$40 for 30 minutes of feeling high for two kids is about the price we pay these days as labour costs and inflation begin to bite the Singapore economy. Still, there is a cheaper way for adults to enjoy themselves.
Disclaimer: This is not financial advice. Do your own due diligence and understand your risk appetite.
It is no surprise that we are feeling the onset of the Crypto Winter with BTC below $20,000 and ETH below $1,000. While cryptocurrency investors are feeling the hurt and pain from investment losses, I don’t think there is any harm in treating ourselves to some crypto amusement.
p.s. I shared my takeaways from the Luna crash here:
So long as you are not looking for investment gains and want to treat the cryptocurrency landscape as a jackpot machine, you have a lot of freedom to explore cryptocurrency trading safely and update yourself on the usefulness of blockchains and the innovations in the decentralised finance space.
i) Start with a 1,000,000 Luna Classic tokens in Crypto.com
An excellent place to begin is where the crypto devastation has already taken place. As this is an educational journey, a good place to start is at the Terra Classic blockchain, where the de-pegging of Terra USD has already wiped out $60b of capital worldwide.
The benefit of playing in this space is that you can buy One million units of LUNC tokens for about $81. Luna Classic has crashed so badly that it is now worth about $0.000054. I can buy these 1,000,000 LUNC tokens on crypto.com and transfer them to my Terra Station wallet.
ii) Transport the 1,000,000 LUNC into the Terra Station wallet and convert it to Terra USD
Once the 1,000,000 LUNC is moved to Terra Station, you can begin to convert it to a de-pegged UST currency. UST was supposed to be pegged 1:1 to the USD, but it failed and triggered a bank run. It is now only worth 0.63 cents. You can convert 1,000,000 LUNC into over 9,000 UST tokens where it can be used in various “amusement parks” or decentralised finance platforms that still function in the almost defunct blockchain.
iii) Play your UST tokens in the Mirror Protocol
Before the collapse of the Terra blockchain ecosystem, the Mirror protocol platform is a way for cryptocurrency investors to take up exposure to real-world stocks or synthetic assets. The system polls for basic stock market pricing information and allows investors to trade Terra USD against a bootleg or synthetic version of a stock like Apple (AAPL). This synthetic asset is an mAsset, with mAAPL being a synthetic Apple stock.
Thanks to the collapse of the Terra USD peg, you can buy or even short mAAPL stock using your UST funny money, and you can even build a portfolio of synthetic assets with $10 of real money. This is probably the only way to make a long-short portfolio like a professional hedge fund manager with $50 of real money. Of course, your gains and losses will be minimal and you may even lose more money when UST drops further concerning real fiat currency.
iv) Farm your assets with ridiculously high-interest rates
One side effect of the collapse of the Terra ecosystem is that liquidity gets sucked out of a system so quickly, that the incentive to provide liquidity to keep the exchange functioning becomes very high. In Mirror Protocol, yields can reach thousands of percentage points.
It is possible to combine a long farm and a short farm of mVIXY to get 695% annual percentage rate and 1,504%, respectively. This is an approach called delta-hedging, where you balance the long and short positions in the VIX index and earn interest on your capital outlay. While the returns seem astronomical, you get paid in another token called MIR, which can also depreciate quite quickly.
My personal experience is that these Mirror tokens can be rapidly converted to more UST tokens to extend your stay in this amusement park.
Any chance of turning all this into actual financial gains?
The odds of turning all this into significant gains are slim at best. One bright spark is that the Terra Classic community is on a drive to burn LUNC tokens so that scarcity may drive up unit prices.
As of now, even as burning has accelerated, we are still not seeing this translated into higher prices. I believe that for the blockchain to have any chance of coming back from the dead, the influence of Do Kwon, the founder of Terraform Labs, will need to be eliminated before this has any chance to take place.
Another reason to build up the knowledge and infrastructure for trading cryptos is that we have seen valuations drop because we are in a regime of rising interest rates. When interest rates fall perhaps a year or two later, high-risk high return strategies, including cryptocurrency speculation, will come back with a vengeance.
In summary, cryptocurrencies are fertile ground for fun and experimentation once you remove the need to earn actual returns. So far, my personal experience of buying 1,000,000 LUNC has been a lot more fun and amusing than my short 30 min stint at Timezone.
I hope readers will temper their expectations if they decide to get into cryptocurrency investing at this time.