How I Lost Money On Crypto – Don’t Make The Same Mistakes As I Did!

How I Lost Money On Crypto – Don’t Make The Same Mistakes As I Did!

I want to discuss how I recently lost over $14,000. Now, every day we seem to see a new hacking story enter the mainstream media, but this one actually affected me. I just want to discuss the risks around day 5 and how you guys can avoid it yourselves.

The reason why I’m always talking about diversification and never having all of your eggs in one basket and all of that sort of stuff is exactly because of this. I have my money spread around different DeFi platforms and centralized platforms in order to earn me income passively but have a diversified risk and have some more safe options.

Now as this article is about staking, one of the best platforms is Jet-Bot, an official broker of the Binance exchange you can stake your coins for passive income. As you know, when you stake your crypto, you get a massive return in comparison to what you get in a normal bank, but this does not come without its risks, so in my opinion, it’s safer for me to be super calm and put them into Jet-Bot which have more safety measures in place to protect your funds.

First of all, jumping on to the news, crypto scammers are feeding off the hype surrounding Moonbirds. This is a new NFT project. The FBI says North Korea hackers stole more than $600 million in crypto currencies in a single hack.

Most recently, we have seen beanstalk farm lose more than $180 million in the 4th largest DeFi hack in history. This was the one that actually affected me. A project is Don-key Finance. I’ve spoken to the team directly regarding this issue, and I am not here to point fingers at them when we get invested in DeFi. This is decentralized finance, you have to understand the risks. So in a bank, if you were to invest money into, say, some sort of high interest yield account where they paid you 0.0004% and you were like, yes, this is the best return ever, they would also have strict measures in place if the bank was, for example, robbed. They wouldn’t directly be robbing your money. This same sort of thing doesn’t necessarily exist in the DeFi world yet. Yes, some platforms have insurance, but this doesn’t exist for the most part yet. When hacks happen, if a hacker steals your funds, no one is going to come and help you. No one is going to save the day. No one’s going to refund your money or directly refund your money.

I spoke to the founders of Don-key and they are actively trying to get this money back or do their best to mitigate what’s happened. Of course, it isn’t on them to do this. Where I had my money on this platform was in this sponsored pool, Don-key Finance.

If you don’t know what they do, it’s copy yield farming. You put your money into one single pool and then one farmer takes that money and puts it into different baskets to yield you income. There are a number of different options here and I personally chose the BUSD fund. I didn’t want to have the risk of impermanent loss, but I wanted to have a stable coin. Now this is the safer option in my eyes, but of course, there is still a risk of hacks and that’s sadly exactly what happened.

So for full transparency, I invested over $107,500 into this pool. I also have 50 000 DON staked tokens, which in turn gives me a 35% return. I have just under $800 ready to harvest or take out. You can choose to put this back into the farm or you can simply exchange it for BUSD or whatever you want.

That’s what I’ve been doing for around the last four months and what exactly happened was this farmer here put the pooled funds into a number of different investment strategies. The Don-key BUSD pool will migrate your funds throughout different stable farms all across the DeFi space using different networks and bridges to find the best yield for you.

So what they do is they put it into different parts. One of those parts that they put it into was into a Beanstalk pool and sadly, this was the attack right. This was the one that got hacked. So that is right there How quickly I lost $14,000 in a single day.

The reason why I wanted to explain it to you is just to make you guys aware that this is a possibility, so don’t put all of your money into one place. If you want to take the risk of spreading the risk, put it onto different platforms because we never know what’s going to happen. And like I was saying earlier, one of the ways that you can mitigate the risk is by using a centralized platform with different strict measures in place.

But that’s just one way. Some of the other platforms that I personally use in the DeFi world are the Anchor protocol. This is based on the Terra Luna ecosystem. I have staked here, of course, because this is decentralized, it could be hacked, but this is a much larger protocol with billions of dollars of locked value in comparison to something like Beanstalk, but again, still very risky. There are a number of different platforms that you can use, but I do hope I provided you some value today.

This was simply to show my story exactly what happened to help you guys understand the risks here. Now this is definitely a learning curve for me. It’s definitely a big wake-up call for me to understand that these risks are very real. I’ll probably try and mix my bag even more now, putting my coins on different platforms and things like that.

[This article is a transcription of a video made by Conor Kenny]

Original video: https://youtu.be/dKikdIyuDHc ]