On April 19, Beijing time, the founder of the well-established cryptocurrency institution Liquid Capital (formerly LD Capital), Yi Lihua, rarely concentrated on releasing suggestions for risk control in a bear market on the X platform, leading to simultaneous reports from several mainstream media outlets. In a time when DeFi protocols frequently face security incidents and macro and geopolitical tensions exacerbate volatility, market sentiment has swiftly shifted from extreme greed to panic, while a truly systemic risk control framework is largely absent among most retail investors. The risks pointed out by Yi Lihua aren't complex: "The risk of losing principal in pursuit of a few percentage points of profit is very high," and the extreme yet real scenario that "The bull market has come, but the principal is gone" strikes at the current market's most vulnerable soft spot. The issue is no longer whether one can still make money on the next short-term trade, but rather: how ordinary investors can preserve their principal and withstand until the next real market cycle arrives amidst a wave of hacking incidents and geopolitical shocks.

Panic Scenes Interwoven with a Series of Explosions and Geopolitical Shocks

Since April, several media outlets have mentioned the trend of "a series of explosions" regarding DeFi protocol security incidents. While there is a lack of complete statistics on the amounts stolen, it has become industry consensus that "the frequency is rising" and "the coverage is expanding." In such an environment, any vulnerability in a contract, negligence in permission management, or even oracle aberrations could become the trigger for draining funds from a pool. For many users who are accustomed to the narrative of "high annualized returns, compound interest, and easy profits," what was originally viewed as foundational infrastructure in DeFi protocols is now exposing its experimental nature once again.

Amidst these security concerns, the KelpDAO hacking incident has become a frequently cited case. According to media reports, KelpDAO previously attracted a large number of users with substantial returns, packaging complex narratives like LSD and re-staking into a “high-yield strategy,” which was once regarded as a quality opportunity in the new cycle. However, following the hacking incident, users intuitively felt that their positions were not merely subject to "profit fluctuations," but that "assets could evaporate at any moment." Behind this lies a continuous tug-of-war between the allure of returns and contract risks—while the protocol side emphasizes innovation and returns, investors are forced to reassess the basis of "trust" after security incidents.

At the same time, Iran-related geopolitical events have stirred turbulence in traditional financial markets and have been seen by numerous crypto media as an important external backdrop for recent volatility. Even without speculating about specific transmission paths, the reality is: whenever tensions in the Middle East rise and expectations of military conflict escalate, global risk assets face pressures for "repricing." As a highly volatile asset, cryptocurrencies are often prioritized for liquidation or used as cash-out tools. The overlapping narratives of security incidents and geopolitical shocks make participants who were originally chasing yields on-chain suddenly aware that they find themselves in a battlefield of multiple risk intersections.

In such a context, the shift in market sentiment from greed to panic occurs extremely swiftly: just a few weeks ago, there were competitions over annualized returns and leverage multiples; just days later, social platforms were flooded with posts about "liquidation" and "lying flat." The retreat of funds often precedes the self-awareness of the emotional curve; by the time panic sentiment spreads widely, many people have already incurred irreparable losses on their principal and only then start discussing how "risk control should be done."

The Deep Pit of Possible Principal Erosion Behind the Allure of a Few Points

In this discussion, Yi Lihua's statement "*For the pursuit of a few percentage points of profit, the risk of losing principal is very high*" has been widely quoted. It directly points to a typical misunderstanding in the current market: at a time when systemic uncertainty is rising, many remain obsessed with optimizing for "a few more percentage points" of returns while overlooking that the loss distribution has shifted from "volatility" to "cliff." The so-called asymmetry of risk and return refers to the fact that the few percentage points you gain may come at the cost of "a significant one-time drop in principal." From the perspectives of expected returns and extreme risks, such trades are not worth it.

This is particularly evident when comparing high-yield DeFi products and financial products from centralized exchanges. On the surface, high-yield DeFi is often labeled as “high risk, high return,” and users anticipate some fluctuations, thus being somewhat vigilant towards risk; whereas exchange-based financial products present themselves as “simple, convenient, and productized,” and are subconsciously categorized by many as “relatively safe,” sometimes even thought of as the crypto version of “bank wealth management.” This perceived safety illusion conceals a series of risks that cannot be ignored, including platform credit, operational compliance, and asset custody, merely shifting risks from "visible contract vulnerabilities" to "invisible centralized custody."

In a phase characterized by frequent hacking incidents and amplified macro uncertainties, the marginal significance of chasing a few extra percentage points of return is greatly compressed: on one hand, the overall volatility range has already become substantial enough to consume these incremental gains; on the other hand, many high-yield opportunities themselves are obtained through stacking complexity and hidden risks, leading to nonlinear losses once something goes wrong. The extreme warning that "The bull market has come, but the principal is gone" serves as a reminder: what is truly expensive is not the few points lost over one or two months, but in the next complete bull market cycle, you may not have enough ammunition to participate at all, and may even have to spend years to make up for this loss.

From a longer-term perspective, the safety of principal corresponds to the right to "continue participating in the game." To sacrifice oneself to be forced out in key years for the sake of a few percentage points is essentially exchanging growth opportunities over many future years for a fleeting sense of psychological satisfaction. If this exchange were placed in any rational risk model, the conclusion would almost certainly be invalid.

The "Pseudo-Safety Migrations" from DeFi to Financial Products in a Bear Market

After a series of security incidents, a common path for investors is to hastily withdraw from high-risk DeFi, then transfer funds to financial products look "stabler" from exchanges. This migration process is both a reallocation of positions and a psychological comfort— the numbers on the asset panel no longer fluctuate violently, and the interface displays clear “annualized returns” and “maturity times,” leading many to mistakenly believe that they have moved from the eye of the storm to a safe zone. However, in essence, they are merely shifting from transparent, visible smart contract risks to more abstract centralized credit risks.

It needs to be repeatedly emphasized that centralized financial products are not a risk-free safe haven. Any mistakes in the platform's own compliance environment, asset-liability structure, counterparty risks, or internal risk control capabilities can be rapidly amplified in extreme markets. At the same time, liquidity risk is particularly pronounced in a bear market: when a large number of users simultaneously wish to redeem while platform assets are locked or mismatched, even if it doesn't lead to “explosions,” it may still hinder you from adjusting positions as planned at crucial times. This delay and uncertainty are themselves a form of high-dimensional risk.

In the phase where volatility is amplified and black swans occur frequently, the importance of traditional disciplinary tools such as profit-taking, stop-loss, position management, and leverage control is repeatedly validated. Although no specific parameters are provided in the current materials, the principles are already quite clear: during extremely unfriendly times, preventing a single position or single event from inflicting fatal damage on overall assets is far more crucial than accurately predicting tops and bottoms. Any product narrative that touts “capital preservation and high interest” or “low risk and high returns” should be met with heightened skepticism—especially in the crypto market where extreme events occur at a frequency far exceeding that of traditional finance.

The migration from DeFi to financial products has the opportunity to serve as a risk control upgrade, but if it merely shifts the impulse to “chase high returns” to another seemingly stable vessel without simultaneously enhancing the understanding of risk sources and systemic shocks, this migration is likely to become a collective self-narcotization.

The Tug-of-War Between Rational Risk Control and Market Greed

In actual investment scenarios, what often drags down risk control is not a lack of knowledge, but emotional entrapment. Many retail investors, when faced with group chats, KOL tweets, and various screenshots, initially remind themselves to “control positions” and “not to go all-in,” but when those around them frequently showcase profit curves and “doubling performances,” even that bit of rationality gets quickly swallowed up by “fear of missing out.” Moving from “let’s try a small trade to see” to “let’s increase the position a bit, don’t be too timid,” then to “this opportunity will never come again,” the psychological defenses are gradually breached, and looking back, they find they have put their originally labeled “long-term positions” and “retirement funds” on the line as well.

In stark contrast, institutions, like Yi Lihua, emphasize repeatedly to “survive first.” In their context, the first principle in a bear market is not to "buy at the bottom," but rather to ensure that the fund curve does not exhibit fatal cliffs and that the team and products can traverse the cycles. In the retail world, the prevailing culture is about chasing price increases, taking risks, and “hitting the jackpot,” while in the institutional world, it revolves around controlling drawdowns, managing liquidity, and "holding on to earn compound interest." These two cultures conflict with each other; the former is amplified by social media, while the latter is often dismissed as “old-fashioned remarks.”

Information noise is particularly intense during a bear market: all sorts of airdrop tutorials, skyrocketing small coins against the trend, and internal message screenshots intertwine, severely undermining the personal will to execute risk control due to herd behavior and survivor bias. When the samples you see are almost all “a very few successful cases,” it becomes difficult to calmly face the reality that “the vast majority have quietly gone bust,” which is precisely a result of the selectivity presented in social media narratives.

To cope with all of this, a more feasible path is to pre-write your own risk control rules during a cooling-off period, including the maximum tolerable loss for a single project, descriptions of scenarios that trigger position reduction, and actions that must be taken under specific volatility levels, and to enforce those rules during the most intense emotional and extreme market times, rather than coming to it impulsively. This method of “formalizing in advance + mechanically executing afterwards” effectively separates risk control from the emotional system and entrusts it to a relatively rigid yet reliable process for handling.

Institutional Leaders' Self-Protective Statements or Honest Reminders for Retail Investors

To understand the weight of these statements, one must first consider who is speaking. Liquid Capital, formerly known as LD Capital, is a veteran institution that has operated for many years in the industry, having experienced several bull-bear transitions and maintaining long-term positions in both primary and secondary markets. Such institutions, with their capital volume, channels for obtaining information, and depth of interaction with project parties and exchanges, far exceed that of ordinary individuals. Because of this, when their founder discusses risk control openly on public platforms, it is often interpreted as a "signal in the wind," rather than merely a personal viewpoint.

From a motivational standpoint, institutional calls for risk control can almost certainly be seen as a composite behavior of self-risk hedging and guiding market expectations. On the one hand, during periods of heightened volatility and potential black swan events, institutions themselves need to lower overall risk exposure and withdraw chips from the most vulnerable assets; on the other hand, by releasing cautious signals and guiding some market participants to reduce leverage and positions, it helps alleviate the intensity of liquidity squeezes and cascading events. Such public statements are inherently part of the game—expressing concern while also using their voice to regulate market behavior.

When mainstream media outlets like Deep Tide TechFlow, BlockBeats, and Jinse Finance amplify these warnings concurrently, the impact extends beyond mere “reminders,” affecting emotions and chip distributions in substantial ways: some small to medium investors may thus exit early or reduce positions, raising price sensitivity to bad news temporarily. For institutions that have already hedged risks or positioned themselves ahead of time, this tightening of sentiment can sometimes even be beneficial—it allows expectations to return to rationality more quickly, creating room for the next phase of positioning.

From the perspective of ordinary readers, a more crucial question is: in such an information field, how to differentiate between good-faith reminders and opinion manipulation? A practical judgment framework is:

● Don't rush to speculate on the speaker's “true motives,” but first assess whether this reminder is universally reasonable for yourself— for example, “Don’t sacrifice principal for a few points” and “The bull market has come but the principal is gone,” regardless of the speaker’s own position, these are nearly universally applicable cautionary principles.

● For any information that could significantly affect your position decisions, try to ask yourself three questions: Is this information independently verifiable? If I don’t see it, does my long-term strategy need to change? If I adjust my positions based on it, what is my greatest downside risk? Through these reflective questions, steer yourself back from being emotionally driven to being strategy-driven.

The public discourse will not stop and certainly will not create buffer zones specifically for individual safety; the only thing you can do is to stabilize your judgment boundaries amidst the noise.

Maintaining the Bottom Line Choice to Hold the Ticket for the Next Bull Market

When we return to the warning "The bull market has come, but the principal is gone," it is no longer just an eye-catching title, but like a bottom-line consensus—at any cycle point, the safety of the principal should always come before the quest for returns. Particularly amidst frequent hacking incidents and rising geopolitical uncertainties, reducing leverage, lowering concentrated exposure, and forgoing risks aimed only at squeezing out a few more percentage points is not just a tactical choice but also a respect for one's future right to participate.

In a bear market phase, regarding “account survival rate” as the primary KPI is much closer to the truth than fixating on short-term return rankings. An account that can withstand several years and multiple large-scale fluctuations without being wiped out is often far more valuable than one that spikes to the top of high-yield lists in a single quarter. Because the former possesses the “right to keep betting,” while the latter may exit the game due to a single black swan event.

For ordinary readers, the next action directions can unfold around several dimensions: first, layered fund management—clearly distinguish essential living funds, safety net funds, and high-risk experiment funds, explicitly indicating which money can never be touched and which can endure total loss; second, setting risk budgets—not just asking "how much more can I earn," but first questioning "what is the maximum loss I can accept in the worst case," and subsequently reverse-engineering positions and product choices based on that; third, maintaining reverence for black swans—acknowledging that extreme events in the crypto market far exceed intuition, proactively reserving redundancy for those "risks you couldn’t imagine," rather than later lamenting "never expected it to go this way."

There’s no need to treat every warning from institutional leaders as absolute directives, but one should also not become bluntly aware of the simple truth after numerous incidents and explosions: the first step is to preserve the principal, so that when the next bull market starts distributing tickets, you still have the eligibility to be at the table.

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