Why I’m Writing This

I’ve been digging into leverage trading research for months now, and the data is absolutely brutal. We’re talking about studies from MIT, UC Berkeley, regulatory bodies. What’s wild is that I’m sharing this while being the Community Lead at Nolus Protocol, a leverage platform. Let me explain why that’s not as contradictory as it sounds.

The Math Doesn’t Lie Across Markets

Here’s the thing - crypto leverage isn’t some special beast. It follows the exact same patterns as traditional markets. Same psychology, same math, same destruction. I studied traditional markets because there’s way more academic data available, and guess what? The patterns are identical everywhere.

India’s Brutal Reality Check

India’s financial regulator did a deep dive into 3 years of stock futures and options data (2022-2024). The results are insane:

  • 93% of individual traders lost money
  • $216 billion in net losses
  • Only 1% made profits over $1,200
  • Institutions made $73 billion off retail losses

This isn’t trading - it’s systematic wealth transfer from regular people to institutions.

Source: Securities and Exchange Board of India (2024)

MIT Economists Drop the Hammer

MIT published research through NBER that should terrify anyone using high leverage:

  • High-leverage traders lost 44% PER MONTH
  • They performed 30-40 percentage points worse than low-leverage traders
  • When leverage was restricted, losses dropped by 40%

This is MIT we’re talking about. When this 2017 NBER paper was written, Alp Simsek was an Associate Professor at MIT Economics. Rawley Heimer was at the Federal Reserve Bank of Cleveland.

Source: Should Retail Investors’ Leverage Be Limited? by Rawley Z. Heimer & Alp Simsek (2017)

European Brokers Are Forced to Tell the Truth

EU regulations make brokers admit how many clients lose money:

These platforms are literally required by law to tell you most of their users lose money. Think about that…

UC Berkeley’s Daily Destruction Study

Berkeley researchers tracked daily performance and found:

  • Regular stock traders: -0.25% per day
  • Margin traders: -0.25% per day
  • Leveraged traders: -0.35% per day

That 0.35% daily loss = roughly 90% annual wealth destruction. Your account gets systematically demolished.

Source: Leveraging Overconfidence (2019)

Crypto Leverage is 1000x Worse

Traditional leverage is bad enough, but crypto cranks everything to 11:

  • 100X-500X leverage (vs 2X-50X in stocks)
  • 24/7 liquidation risk - markets never sleep
  • Insane volatility amplifies everything
  • Zero protection, zero mercy

If 93% lose money with 2X leverage, what happens with 100X? It’s financial suicide.

So Why Am I at Nolus?

Fair question. Here’s the difference: Traditional leverage platforms see 90%+ of users lose money through complete liquidations that wipe you out, profiting when you lose while hiding the real numbers. Nolus operates differently with a <3% liquidation rate (not 93%), 72% profitable trades, asset-backed lending instead of thin air money creation, and partial liquidations that save your position rather than nuking it entirely.

The transparency factor is huge - blockchain doesn’t lie. Every liquidation is recorded on-chain, every profitable trade is public, and the <3% liquidation rate can’t be faked. Smart contracts don’t manipulate statistics like traditional brokers do. Even if Nolus wanted to lie about performance (which would be stupid), they literally can’t. That’s the power of DeFi transparency. Look, if I knew that the majority of Nolus users weren’t winning - meaning they’re just gambling - I would never work for this platform. The data speaks for itself.

The Bottom Line

Look, the data is overwhelming:

  • MIT economists, UC Berkeley professors, regulatory bodies
  • Millions of traders studied over decades
  • Same brutal results everywhere
  • 93-95% lose money with traditional leverage

But here’s the thing - not all leverage is created equal. The key is finding platforms that work FOR traders, not against them. Platforms where the math actually makes sense and the incentives are aligned.

The research isn’t meant to scare people away from leverage entirely. It’s meant to show the massive difference between exploitative systems and transparent alternatives that actually protect users.

In a world where 93% of leveraged traders lose money, the 3% who don’t deserve better tools.

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