For those of us who have been in the trenches since the previous bull market, cryptocurrency is more than just a fast money cash grab. It’s a movement, a revolution, a groundbreaking technological opportunity that will impact billions of people. We’ve been through the highest of highs and lowest of lows, and learned hard and soft skills along the way. I’ve decided to go a bit esoteric on this Holiday weekend and reflect on the learnings from our collective DeFi Journey.
At its core, Decentralized Finance (DeFi) is a mathematical and economic innovation…combining logic that is grounded in truth with globally established Market principals with robust historical data. I’ll begin with the Left Brain (Logical) skills that have been hardened through navigating and developing expertise in DeFi.
Reading price charts - This can be as helpful to understand risk/reward, mean reversion, trends, and associate movements with fundamental catalysts. Here are some of the freely available tools that helped me develop and sharpen my skills.
On-Chain analytics - Bitcoin is extremely transparent, and movements can be traced via the blockchain. Entire companies and industries rely on on-chain data for signal.
Risk management - Volatility has been the name of the game for cryptocurrency and other digital asset investors. Highly speculative, unregulated, 24/7, global markets have tremendous amounts of risk and are extremely sensitive to external catalysts. Learning about and practicing risk management are critical skills to survive this market.
Take profits and have capital on the sidelines for opportunity
Perform due diligence before you ape or deposit
OpSec
Statistics - The most important courses I ever took in my 10 years of university level education for practical application were Stats. I urge anyone who is in DeFi to educate yourself on basic stats to help make good decisions in portfolio allocation and sizing.
Macroeconomics - Crypto is far from immune to macroeconomic phenomena like supply chain, monetary supply, interest rates, and taxes. We all started paying a lot more attention to macro once our crypto bags starting getting bigger.
New valuation approaches - I remember when the very first crypto thought leaders were attempting to create a fair value for tokens based on the value of the network and growth. We’re now able to measure transaction volume, total value secured by the network, wallet growth, etc. At the end of the day, we are nowhere near a perfect system and there is not nearly enough historical data to validate whether any of the models work.
Organization of Information - The amount of clutter we still have to clean up in crypto is insane. Information is aggregated across too many media to keep track cleanly, so we must develop our own systems for efficiency. Twitter lists, Discord/Telegram notifications, private chat groups, Medium/Mirror/Substack subscriptions, and Notion will eventually be aggregated into Web3 native protocols (I hope)!
Develop new due diligence frameworks - We are all doing our best to learn how to trust in a trustless world. Reading code or understanding how to diff forked code have helped save users millions of dollars. Thankfully, we have teams like RugDoc, DefiLlama, and etherscan.com that are providing transparency. We’re also now seeing hundreds of investment opportunities into new protocols at seed or presale stage, and we know nothing about who is building them or what they’ll do with our money. This is an open and permissionless world, and it requires building a repeatable and improvable due diligence framework to help make good decisions.
DeFi and Web3 has galvanized relationships, new communities, and created new jobs across fledgeling companies worth 9-10 figures within a number of months. It’s inspiring watching and participating in these new social networks, and has restored a lot of my faith in the human condition in a seemingly darker world (thanks to what we hear, read and see in MSM). The “Right brain” (creativity and soft) skills required have opened the door to millions more new DeFi participants.
Teamwork - Whether asynchronously or at odd hours, teams have formed and thrived across a global Web3 community. As an American, I never would have been able to get exposure to the many various cultures in the corporate world. My colleagues now span 6 continents and I’ve hosted podcasts with DeFi teams operating tomorrow! I’ve also removed the mask and introduced myself to people over Google meet, Discord, Zoom and realized we’re all dedicated and passionate people looking to do our part to move DeFi into the mainstream.
Diversity is beneficial - Along the lines of team work, diversity has huge benefits in making DeFi appeal to everyone. Regardless of economic background, culture, language, and location, there are willing participants to contribute ideas or content, and want to share the excitement DeFi has provided.
Be bold - Anonymity provides a level playing field for DeFi participants, and most OGs started less than 10 years ago. New ideas and players are encouraged to step up and contribute to DeFi projects and DAOs, or speak out during a Twitter space. The likelihood someone else has the same question is high, and the amount of work this space needs to be done is endless, so being bold usually pays off. I have found myself being open minded and reserving judgement far more in this industry than any previous walk of life, and I’m continuously impressed with the level of intellect.
Personal accountability - The ethos of cryptocurrency and self-custody include taking responsibility for our actions. Investments are our decisions as we click the buttons on our Ledger Nanos, so we must develop a high locus of control. There is nobody to blame but yourself when you get rugged by a DeFi protocol, a token loses value from a bear market, or you expose your seed phrase. This is a very steep learning curve, but the resources to help everyone succeed are plentiful.
Healthy skepticism - This is antithetical to trusting everyone in a dog eat dog world. There are scammers and grifters, and generally a lot of bad actors whenever permissionless money is involved. Developing a healthy skepticism of new projects, asking a lot of questions in a public forum, and patience will save a lot of money and heartache. “If it feels too good to be true, it probably is.”
Make frens and find our tribe - I’m biased, but join Ethropy! Otherwise, engage on Twitter, chat with users of your favorite DeFi protocols on Discord and Telegram, and help each other uncover new opportunities. What goes around, comes around in web3!
Be curious - The first time I ever sent ETH from my Coinbase account to my Ledger hardware wallet was terrifying. Would it show up? Where did it go? How long til it arrives and did I get the hex address right? Same thing goes for the first time I bridged to a different chain…it was terrifying. However, taking the leap, navigating the path, and being curious usually allows DeFi users to build the confidence required to reap the rewards.
Be an Activist - Crypto and Web3 are bigger than self-custody and taking power back from the banks. Web3 is about freedom of creativity and from censorship, and we should all fight for what we believe in. This takes resources, both financial and organizational, and we should support the teams fighting for us to build an inclusive world without walled gardens.
Humility and Respect - Finally, and most importantly, DeFi should teach us the value of being humble and respecting everyone in the ecosystem. Boosting each other up and bringing more people into DeFi grows the pie for everyone.
Ethropy Referral Links
Osmosis Validator for Four Moons - Delegate $OSMO
Voyager Referral - Get $25 in $BTC
Ethropy Wallet - ethropy.eth
Buy a Ledger Hardware Wallet (Affiliate Link)
TradingView Referral - Get $30 off annual Subscription