The opportunities and risks of DeFi, and my investment advice

Since the rise of the DeFi tide during this period, some skyrocketing tokens have not only created dozens or even hundreds of times the increase.

What's interesting is that many of the beneficiaries in this wave of gains are the so-called "new leeks"-that is, new investors who have poured in in this round of tide. However, most investors who have experienced ICO or entered the bear market in the past few years seem to be half a beat behind, and have not caught up with this train. They look at the tepid mainstream coins in their hands, feeling anxious and anxious.

And just yesterday, the popular star YAM in recent days had an emergency security incident. Due to the problem of the contract code, the price of the project tokens plummeted by more than 97%, and the prices of the tokens in several liquidity pools established by YAM were also reduced. Pulled directly into the water, many investors lost their money.

There are many investors who have a lot of YAM positions exposed their own misery: starting with 10,000 yuan fell to only a few cents; starting with several million fell to only a few hundred yuan...

I am afraid that many new leeks have witnessed what is called "returning to the pre-liberation overnight" before they have had time to taste the taste of "getting rich overnight".

For the new leeks, this sudden change in the market may be a cold head, which seriously affects the confidence to participate in the market in the future; for the old leeks, the envy, jealousy and hatred that have been caused by seeing the skyrocketing DeFi for many days but completely emptying themselves Finally got some relief.

So what's next for the market? Will DeFi end here?

I think the market will continue to move forward after a period of rest, and the DeFi craze will continue. This incident is just an episode. As long as a new currency that produces wealth effects appears in the circle, everyone will soon The scars will heal and the pain will be forgotten, and the most fundamental reason is that innovations about DeFi are still emerging. As long as this driving force is still there, the driving force for the market to move forward will still be there.

So what lessons should we learn from this YAM incident? I think the biggest lesson is the issue of asset allocation. This is also the point that I have been wanting to share with you since the rise of this round of DeFi tide, but I have not had time to share it.

The point that I have been emphasizing repeatedly in the article is:In the investment market, the most important thing for us is to survive the market and have the ability to follow the market all the time. As long as we can survive, there will be no shortage of opportunities, and we must be able to seize our own opportunities.

To survive in the market, we must have a life-saving basic market. As long as we have a basic market, even if our assets suffer losses, we still have the capital to make a comeback and not be eliminated by the market.

To maintain the basic market, specifically corresponding to the investment layout, that is, we still need to configure mainstream currencies. In any case, the allocation of mainstream currencies should not be less than 60% of the total allocation of all our digital currencies. Among mainstream currencies, The combined configuration of Bitcoin and Ethereum will account for an absolute large proportion. Except for mainstream currencies, the remaining funds are redistributed to other investments.

Taking myself as an example, the allocation of mainstream currencies accounts for 70% of the total investment. Of the 70%, 30% is Bitcoin, the other 30% is Ethereum, and 10% is the platform currency of the three major exchanges. In addition, I have sold all other mainstream currencies I once held in batches, and next I will slowly sell the three major platform currencies while they are high, and replace them all with Ethereum. Because whether it is for long-term investment or for participating in DeFi investment in the future, Ethereum is just needed.

Of the remaining 30% of my funds, I will use 10% to participate in existing DeFi projects, another 10% to participate in subsequent projects, and the other 10% to flexibly allocate funds.

Therefore, no matter how crazy the market will be in the future, we must firmly hold the mainstream currency in our hands and stabilize our basic market. Only in this way can we "let the wind and waves rise and sit firmly on the Diaoyutai" and have the strength to withstand the stormy market , Only then have the confidence and courage to participate in various endless gameplays.