By: The DeFi Edge
Compiled by: Zombit
I have been in the DeFi field for three years. Here are 31 things I wish I could tell my past self:
Making a profit and then investing in a higher risk project is not really a profit, it is just gambling. Profits should be transferred to BTC, ETH, stablecoins or fiat currencies.
Projects with a strong fan base can be very profitable, but remember to quit before everyone loses faith.
It’s probably not worth locking up your tokens for more gains. It sucks to watch money locked up in a project that's about to collapse.
Keep yourself focused. Time and energy are limited, don’t waste it on unnecessary cryptocurrency dramas.
Be cautious when pursuing too high a rate of return. There is no such thing as a free lunch. Greater returns come with greater risks.
Be skeptical of advice on social media, everyone has their own motivations. Are they promoting a project for their own benefit? Or is it to manipulate the algorithms of social media?
When facing emerging topics, give priority to market leaders, who have first-mover advantages and higher visibility. But the investments with the greatest potential are often those in forks of emerging blockchains.
Being overly obsessed with the latest tool doesn’t actually do much good. You don't need that many tools. The most successful people only use basic tools like Etherscan, Debank, DeFiLlama, etc.
I'm not worried about people who have done 10,000 kicks, but I'm afraid of people who have done one kick 10,000 times. -Bruce Lee
There is a "food chain" for information flow: Creator > Investors/Insiders > Large Investors > Automated Trading Robots > Manual Traders (Know Early) > Manual Traders (Know Late). By the time everyone is talking on social media, you may already be too late.
Real investment value comes either from inside information or from in-depth research that no one else is willing to do. Most people underestimate the value of the project’s Medium and Discord communities.
It all happens again, just in a slightly different form. The key to DeFi is pattern recognition. For example, if some influential person starts discussing a project, they are attracting you to become the liquidity for his exit.
Get in early and wait for the rewards. By the time you start feeling FOMO, it's probably too late.
Think of your P&L as a percentage of your portfolio rather than counting it. This will help you stay calm.
Stop losses promptly. Set a stop loss point before entering the trade, and exit the trade as soon as it is reached.
Record all your trades, mistakes, and lessons learned so your judgment will become more accurate.
In a bull market, fundamentals don't matter. Everyone is buying and selling based on hype and emotions, so look at the reality of things rather than the ideal state.
Incentives can drive prices, such as airdrop rewards, staking rewards, ecosystem rewards, and more. People buy in anticipation of future benefits.
Don't worship anyone too much. Even the smartest people in the market make mistakes. Look at guys like Alameda and 3AC, no one is really "too big to fail." Be aggressive about protecting your money when rumors of bankruptcy arise. If you're right, you save a lot of money. Even if you're wrong, it only costs a few minutes and a few bucks.
The key is not whether you are right or wrong, but how much you can make when you are right and how much less you can lose when you are wrong.
Specializing in one area is an advantage that cannot be ignored. No one can pay attention to everything, pick a few areas and always know more than everyone else.
Macroeconomic changes actually don't help you much, just focus on capital flows.
Economists have a terrible record at predicting events. This is beyond simplification; it's like medieval medicine. - Nassim Nicholas Taleb
Don’t touch cryptocurrencies when you are emotionally unstable, drunk, or sleep-deprived. One small mistake can destroy years of hard work.
Stablecoins are not as stable as you think. UST collapsed and USDC was at risk of decoupling. It's entirely possible to park your nest egg in a traditional bank.
If you want your portfolio to grow, concentrate; if you want to protect it, diversify.
Build a trading system. These rules and frameworks will prevent emotions from affecting your operations. This includes how to profit and when to invest.
It’s unrealistic to think that trading enough can increase your portfolio 100x. This is not 2016 anymore. 99% of people would rather be looking for ways to increase their cash flow.
People prefer new projects and narratives – not your stuck targets in 2021. Don't be anti-human.
Be skeptical of advice on Crypto Twitter – everyone has a hidden agenda. Are they promoting a project to drive up their own bids? Or spreading misinformation to manipulate Twitter’s algorithm?
Take care of yourself first.
Don't limit yourself to encrypted content. By studying game theory, behavioral economics, and psychology, you will learn much more than the articles in EigenLayer Chapter 9.
The best projects embrace both fundamentals and market psychology. Market psychology draws attention, while fundamentals give people reasons to hold on.
Unknown risks are the most deadly, such as founders gambling with funds or anonymous founders with a shady past. It's unpredictable, and this is when locking in profits, betting techniques, and portfolio management become your most important defenses.
There are more lessons to be shared, but we are approaching everyone’s attention span. Remember, there are exceptions to every rule. These are principles I learned and I continue to learn and revise.
The market is highly volatile. Considering all the problems of the past two years, people may be disappointed with DeFi. But I still have faith in DeFi and I have invested the next ten years of my life in it. Why? I saw its potential: efficiency, transparency. It creates a new world for us where we have more control over our hard-earned money.
This article 3 years of currency speculation experience: 31 pieces of advice from The DeFi Edge to myself first appeared on Zombit.