Review of my DeFi investment experience

As soon as yesterday’s article was published, many friends left messages asking which is the next track in the blockchain investment market. Everyone also hopes to plan ahead for the next track so as to seize new opportunities.

In fact, regarding the future track, I wrote about the second layer expansion and NFT in the previous article, and today I would like to share with you my more macro understanding.

When looking at the future, I always like to look back at history first.

There is a good example in the current market: DeFi (decentralized finance), so let's first review the process of the rise of DeFi.

DeFi, as an ecology now, has formed a scale effect in my opinion. Although there are still many subdivisions in this ecology that need to be improved, and there will definitely be new explosive projects and latecomers in these subdivisions, but it Some basic structures and frameworks have been formed, which cannot be regarded as a new track.

In such an ecology, new projects will still emerge one after another, but it is estimated that it will be difficult to reproduce the phenomenon of a new project appearing in almost three or two days and quickly becoming a leader in a certain segment like last year.

The well-known DeFi projects we see now: Uni, Sushi, Aave, SNX, Compound, CRV, YFI, UMA, Ren, 1inch, Hegic, etc., almost all rose last year, and almost all of them were launched before November 2020. Items that appear.

Since I was a witness, I can still vividly remember the scene at that time: that period was the Cambrian explosion era of DeFi, and various projects emerged like a blowout, making it dizzying.

Although individual DeFi projects such as MakerDAO and Loopring have existed for a long time, in the earlier era, these old-fashioned projects that were later classified as DeFi can only be regarded as isolated cases. DeFi as a whole ecology has not yet formed. No resonance is formed, and without resonance, the effects they induce are very small.

The real formation and explosion of this ecology will start from the issuance of Compound tokens and the launch of liquidity mining in June 2020.

To some extent, I think it is the brand-new business model of liquidity mining that detonated this ecology. As soon as this model appeared, it quickly attracted the attention of investors and speculators. In just five months from June to November, the infrastructure of the entire DeFi ecosystem was quickly completed, which is simply unprecedented in other technological fields. unimaginable.

In the face of such a sudden tide, if investors cannot keep up with their cognition, or their sensitivity is not high enough, it will be difficult to seize this extremely short but extremely lucrative bonus period.

I remember that on the day when Compound was released, although I heard the news, I didn’t pay much attention to it. However, the development and news in the next few days made me realize the possible unusual meaning behind this event.

So I started to browse all the DeFi projects I could see at that time, especially some emerging projects such as Uniswap, Balancer, etc., and for a deeper understanding, I personally tried their functions, such as going up to buy coins, to experience The difference between decentralized exchanges and centralized exchanges.

I didn’t expect that these attempts made me a beneficiary of token airdrops from these projects, which was purely accidental.

Recalling this history now, I am not a forerunner of the DeFi track, nor did I clearly see that DeFi must be the next track. I even think that even if someone saw that DeFi was the next track, it would be difficult to directly obtain investment returns from that knowledge. Because almost all of the well-known DeFi projects I listed above issued coins after June 2020. Investors don't have much of a relationship with them until they issue coins.

Later, the reason why I was able to experience this period of history personally, I think there are two biggest experiences:

One is to be sensitive to all kinds of news in the circle at all times, and when you see these news, you must not easily deny any new projects because of your inherent cognition.

Second, for new projects and things, if your own conditions permit, you must try them out. This kind of first-hand feeling cannot be given by anyone, and this feeling can often bring people some kind of intuition. This intuition may subconsciously remind you whether a new era is coming.

Today we review the history, and tomorrow I will share with you my views on various current tracks.