Thread by @cpt_n3mo11

40% Crash on 19 May 2021 - Something I learned about the ETH chain. It's nothing new, but worth mentioning for retail traders like myself. 👇👇

I am all for composability - that's the beauty of DeFi after all - but there are ramifications in the event of an omega wick down, like yesterday.

I have collateral on 3 lending protocols:
- @anchor_protocol ($bLUNA)
- @AaveAave on Ethereum ($ETH)
- @AaveAave on Polygon ($wETH)

Both Anchor and Aave are currently running liquidity mining programs, i.e. you're paid to borrow.

On Anchor, you're paid in $ANC tokens; on Aave ETH I'm paid in $stkAAVE; on Aave Polygon I'm paid in $MATIC.

So why not take out a loan? I did, and maintained a 40-50% LTV.

Then came the massive drawdown. Omega candlewick down as shared.

My liquidation price for $LUNA was $9.50, and as it went close to $10, I knew I had to repay my loans. I exited my LP positions on anchor and mirror, converted everything to $UST and repaid the loans.

However, this message popped up (see below), which caused me a little panic. I did a hard refresh, and my balances all showed $0.

Checked the @anchor_protocol TG chat, and turns out many had the same problem.

Waited a few minutes before doing a hard refresh again - and all was well. Transaction had gone through and $UST repaid. Liquidation price of $LUNA dropped to $2.

You can read more about the issues Anchor faced over here:

https://twitter.com/anchor_protocol/status/1395290778595852288?s=21

But that's not what I'm trying to get at. Transactions on @anchor_protocol and @terra_money were fast and efficient!

From liquidating my LP positions on Anchor and Mirror to converting them to UST to repaying my loans - all in all took 15 min and costed $2 in fees. Beautiful.

I had a similar experience with @AaveAave (Polygon). My HF was had reduced to 1.4 and I was pretty uncomfortable.

Had previously been farming borrwed stables on @CurveFinance so withdrew that and immediately repaid the $USDT.

This was even faster, and fees were negligible.

The issue was with my funds on Aave Ethereum. My HF was < 1.2 and I was practically helpless:

- I had no stables on Ethereum
- Depositing them onto Eth would've taken hours (given the congestion)
- Gwei was 1,500, which is terribly unfriendly for retail investors like myself

Perhaps it's my fault for trying to be smart with bridging my stablecoins onto Polygon for higher % APYs. I would not have bridged them back in time.

I got lucky though - $ETH bottomed out at ~$1,900 and my liq price was $1,800. HF was 1.1 at the lowest.

A lesson for other retail investors:

You never know when a massive drawdown is coming so if you're going to take out loans, make sure you are on chains that allow you to repay them VERY quickly. The speed and costs on @terra_money and @0xPolygon really prevailed this time.

This morning, I spent ~$600 to repay my loans on Aave (Ethereum) and withdraw my collateral.

I bridged them over on Matic Bridge, and redeposited them on Aave (Polygon).

ETH-maxis, please don't get me wrong. I love ETH and believe in the future being built on it / its sidechains. Likewise, as you can tell, I am a big fan of @AaveAave.

This is just a thread for those who can't afford ETH gas fees, especially when gwei went up to as high as 1,500.