How To Avoid Gambler’s Ruin in Crypto

I lost it all investing in Terra blockchain’s DeFi ecosystem with LUNA and UST.

The $40 billion implosion of Terra v1 has been in the news lately, so I won’t go into great detail regarding the specifics. Suffice it to say that I’m one of those unfortunate investors who got suckered into the vision for and promise of a new decentralized money.

I ended up losing a significant amount of savings in the process.

Easy Come, Easy Go…

At one point, I found myself up 10x on my original investment.

Now this is a tale as old as time: instead of cashing out some of my profits, I doubled down. Countless bubbles have left people financially ruined. Greed is a powerful emotion and even someone as smart as Issac Newton famously lost a small fortune betting on stocks.

While it is tempting to play the should-of-would-of-could-of game, I shall resist the urge here because the exercise is too fraught with hindsight bias. Instead, I want to better understand my own psychology at the time and if there exists an argument that I would have found more persuasive to take profits.

The trouble is I’m a risk-taker and a gambler by nature.