Thanks for taking the time to write down your thoughts on the matter. I am addressing your remarks one-by-one below:

1. First of all, liquidity crises vary in scale. The last one, in particular, wasn’t something to scare the majority of investors and force them to the exits. Also, “doing well” in one recent liquidity crisis can’t give you enough data to make a well-informed forecast about future problems, does it? You are asking whether I think these companies don’t understand the volatility of cryptocurrencies? Of course, I am not. They are among the most successful service providers in the field. However, assuming just based on this that they have risk management strategies in place is just wishful thinking. Can you elaborate on what exactly strategies you think they have? Because there is no point in applying risk management strategies, alternative to LTV, and not listing them in your whitepaper. In fact, if you take a deeper look at Celsius Network’s whitepaper, you will find this: “General global market and economic conditions may have an adverse impact on the Company’s operating performance, results of operations and/or cash flows.” This is them acknowledging the problems I mark in my article.

2. Your second paragraph doesn’t contradict any point I make within my article. I discussed the LTV above, so nothing new here. About the insurance — every other crypto-related business, be it an exchange, a credit lender, etc. is using a custodian service provider like BitGo or else. This has basically become the norm within the field, so it doesn’t make companies like these some innovators. Nevertheless, nowhere in my piece, I am talking about the risk of hacks facing crypto lending companies. No idea how you derived this conclusion. Your point of service providers going bust due to a sharp decline in cryptocurrency prices stands. However, I didn’t mention this risk at all either. I am talking about borrowers being exposed to that risk, not lenders. Lenders with tightened lending policies (overcollateralized) can just lose clients. That is all. The problem comes if they decide to loosen their lending policies due to increased competition or other factors, similar to the numerous cases we’ve witnessed within traditional credit markets.

3. About your third point — whether crypto lending industries are the future remains to be seen. I would also like to think that way. For now, their models are proving successful, which is why the industry is booming (mentioned above). Also, comparing them with traditional credit markets and saying that they are far superior is a point that I find hard to agree with. Last but not least, thinking that your past success is a guarantee for your future one is a recipe for disaster.

In the end, I would like to say that I firmly believe in the potential of the digital assets industry. However, believing that it is the Holy Grail which makes it immune to the risks that are typical for the traditional financial industry, which has been around for ages, isn’t adequate at all. The sooner the industry insiders get that, the healthier market we will enjoy.

The article above, as generalized as you find it, is based on research and states the facts and the potential worst-case scenario that we may experience depending on how things develop in the future. That is why the final paragraph lists the prerequisites and not factors that will surely unleash such a crisis. As I stated above, “Until the bubble bursts, the implications of a credit crisis are just assumptions.”