Learnings from 1.5 years in crypto
I started my journey in crypto in December 2020 and here’s what I’ve learnt after 1.5 years.
Minting hyped NFTs
I remember for the Galactic Punks mint in October 2021, you had to be an active member in the discord community and that meant constantly chatting. Staying superficially active for 24 hours was tough but it was necessary to make it into the whitelist. In the end, it paid off because it was one of the earliest and most hyped NFT project on Terra and floor prices were 10x from its mint price. In hindsight, this certainly doesn’t happen for all NFTs and I was lucky.
Verdict: worth participating if in a bull run
Play to earn games / Gamefi
Mainly scam especially projects that focuses all their efforts on game economies (how much you can potentially earn) rather than actual gameplay. There are legit ones like Axie, Crabada, DFK etc but when you hear about people earning more in a p2e game than their day jobs, that’s when you know it’s at its peak - and it could only go down from there on. Folks who bought into the Axie hype in June 2021 were ultimately burnt as SLP prices bled causing prices of Axies to decrease too. Ultimately, people who bought in from the hype to breed or play can’t exit without taking a loss.
When I bought my 3 Axies, I did a lot of research as to what team I should buy - but lo and behold I didn’t expect that Sky Mavis, its creator was able to make core changes to breeding which caused Axie prices to drop significantly. Played Axie for almost 2 months to recoup 50% of my capital before feeling like it’s a chore. My learning here is that calculating ‘earning potential’ based on current prices would only cause you harm - inflationary tokens can do a -90% and another -90%. If you do want to try, have a much shorter time horizon planning (1 - 2 months) and stick to your plans.
A special shoutout to Gods Unchained that focused mainly on the actual gameplay and cards before launching their token. Genuinely enjoyed the card game and I’m still waiting gameplay videos on youtube even though I’ve stopped playing the game.
Verdict: not worth. Give it a few more years for ‘xxx-to-earn’ mechanics to prove itself.
Yield farming
I remember the first ponzu farm I participated in was Pancakeswap, aped into one of the CAKE farms for 100% APR. Harvest CAKE rewards and stake them to earn more CAKE. Ponzu 101.
Ponzu farms are exciting at the start but the risk to reward ratio for these are not worth it. There used to be an era of ponzu farms with upwards of 10k% APR but it is absolutely not worth it. It highly favors the ones who were early and all who joins in after the initial hype have just signed up to be exit liquidity.
Farms that are more established or in other words, ones that give out significant less of their inflationary tokens to liquidity providers which are technically still ponzu farms, will often wreck you with impermanent losses. Providing liquidity is fun when market is sideways or up only but the minute the market corrects, and your liquidity is not withdrawn, impermanent loss will eat up all the ‘fees’ you’ve gained. This fees gained pitch from farms just doesn’t cut it - the reality is fees and additional token rewards will not cover your IL. When market corrects, the inflationary token rewards corrects more.
Verdict: worth if you are actively managing your liquidity positions. Not worth if you’re looking for passive income. There’s nothing passive about providing liquidity if you don’t want to be in the red.
Staking / locking up tokens
The term staking today is being used in almost anything that involves locking up tokens. This section is on locking up tokens for x amount of time to earn y in rewards. Even if you have a long time view on the project, position size your locks. Rewards can be lucrative but if a bear market comes midway through your locks, whatever token rewards will be negligible and you’ve no choice but to wait out the full lock period.
I learnt the hard way that having liquidity at hand is way more important than earning 10% on your locked tokens. 10% doesn’t mean anything if token prices are down -99%.
Verdict: not worth. Even if you have a long time view, position size your locks (e.g. 5 - 10% locked).
What I find helpful and will continue to do
The space moves 24/7 and it moves fast. Every news, update and project wants your attention but most don’t deserve it. Be at peace with what you’ve missed as opportunities are endless.
Journal your investment/trading ideas, thesis and actions. This has helped me to stay sane during the Luna/UST downfall.
Instead of looking at charts all day, contribute something. Be it learning to code, or summarizing Twitter spaces, contributing to the space gets you noticed and allows for opportunities to come your way. Bonus: learn SQL and get paid to solve bounties for various projects (Thorchain, ETH, Algorand, etc) at Flipside.
Find your community - be it joining a DAO or talking to random people that you click with on CT/Discord, it feels nice to learn and shitpost with a group who shares the same interest as you.
Last but not least, have a long term view on the space in general, but a short term view on projects so that you continue to be critical rather than complacent.
Moving forward, will continue to post other analytics I find interesting. Goodbye Terra analytics, you will be missed. Last dashboard before the crash: https://share.streamlit.io/sem1d5/terraswap-astroport/main/app.py