What is the biggest fear when doing on-chain financial management? It's not that you can't make money, but that a sudden shift in the market trend can lead to liquidation. Over the years, I’ve been dealing with risk in certain blockchain yield protocols and have summarized a key rule: no single strategy can cover all market conditions.

**When the market is good, it's actually better to be conservative**

When a bull market arrives, watching mainstream coins hit daily涨停 (limit up), it’s easy to get carried away. Low borrowing costs and high yield potential tempt many to leverage aggressively. I understand this impulse, but this is precisely when it’s easiest to fall into traps.

When the prices of mainstream coins like BNB surge, borrowing demand skyrockets, pushing up the overall market interest rates. You can take advantage of this wave to earn higher interest spreads, but don’t let greed blind you. Many people push their collateral ratios to the limit during market peaks, thinking prices will keep soaring. A decent correction, however, can immediately wipe out their positions.

The correct approach in a bull market is: moderate efficiency, but always leave enough buffer. Keep your collateral ratio away from the red line, reserving a 30-50% safety margin is the safest. Also, don’t forget the on-chain airdrop mechanisms—timely upgrades and participation in activities often yield more than hard-earned arbitrage.

**Bear markets test your mindset**

Conversely, bear markets test your resilience. Prices drift downward continuously, and the forums are full of cries of despair. At this point, making money is not the top priority; survival is.

First thing: pull out all positions and review each collateral ratio. For any position close to liquidation, immediately repay the debt. Better to sacrifice some potential interest spread than to risk liquidation. Keep your risk exposure at a level where you can sleep peacefully. Some people are reluctant to repay in a bear market, but ultimately, forced liquidation by the market is self-inflicted.

In bear markets, borrowing rates are usually low, but arbitrage opportunities are only a few points wide—hardly worth the effort. The strategy must shift completely—switch from offense to absolute defense. Only engage in the most core, least volatile trading pairs; stable positive interest spreads are the goal.

**Sideways markets test your skills**

When the market consolidates and swings up and down, it’s actually the best time to operate. No clear direction, but volatility itself offers plenty of opportunities.

In such times, I set a trading range. At relatively low points, slowly add collateral with reserved funds; at relatively high points, gradually repay some debt. This process doesn’t significantly increase risk, but through multiple small adjustments, you can position your holdings more comfortably. The key is patience—don’t try to do everything at once.

**Collateral ratio is your life-and-death switch**

After all this, the core is simple: learn to use the collateral ratio as a switch to control risk.

In a bull market, you can be moderately aggressive, but don’t turn the switch too far; in a bear market, be conservative and keep the switch tightly closed; in sideways markets, operate flexibly, adjusting the switch frequently. Reacting in real-time to market conditions allows you to navigate different phases smoothly.

Many think that experts should always be on the offensive, but that’s not true. True masters know when to contract, when to allocate, and when to simply lie low. Market laws are as natural as water flowing downhill; your strategy should flow like water—adapting to the environment at any moment.

Play it this way, and you’ll be able to survive longer in the crypto world.