Your math assumes he lost 0% on the rest of his savings, while "those storing equity in ultra boring indexes" where storing 100% of their savings there. Is that really a fair accounting, in your opinion?
Generally people don't lose all their investments in a stock or index fund. They might go down in price 10% on fund xyz but won't lose all their value. Do you not get that difference with this, this would not happen if he bought stocks with 10% of his money.
If I buy a fund that holds 90% cash and 10% of a BlockFi farming contract, then I only lost 10%. OP said only 10% was in blockfi, so he did not lose all his value.
Obviously you know that, just somewhat of a silly observation to make that he "lost less" when he actually lost 100% of his investment (barring recovery in bankruptcy court)
I think it looks less bad in the weird context of 2020-2022, when breaking even with inflation meant moving money into riskier and riskier investments just to keep up with the money printer. I wouldn't have chosen something like BlockFi, but then again I'm one of the idiots that lost via a mix of inflation and various ultra boring indexes.
I can see where it might look tempting or even rational to see how long you can keep the hand on the oven without getting burned for some of the interest rates being offered on these "exchanges", especially in times of pretty desperately negative real interest rates on USD.
Honestly anybody who only lost 10% in the last year looks like a genius (crypto included).