Multicoin Partner: How to find the optimal solution for investment?
Compile: Amber
Compile: Amber
This article will explore almost the most important part of the investment process - "decision making".
The investment decision here includes not only personal investment choices, but also a series of issues that Multicoin will consider before investing from an institutional perspective, as well as some precautions.
If I summarize it in the most concise words, I think it is:
simple > complex
concise > verbose
So, how to be simple in "decision-making"?
That is, by optimizing over a single variable.
You make a lot of decisions in life - where should you live? What car should you drive? what should you eat etc.
There are theoretically countless variables to optimize.
One way to approach "decision making" is to take a list of these variables and create some kind of weighted scale for the importance of each variable, and then try to evaluate the possible outcomes of each potential decision along several dimensions, resulting in Weight the score and use it to find the optimal solution.
This approach sounds rational, but from what I understand, a single variable is probably more important than all the others combined for most decisions.
This is why the key to "decision making" is not to build complex utility models, but to clearly know which of the variables you need to optimize.
As a quick example, I basically only buy one brand of t-shirts that I know fits me well, so I don't have to think about what to wear, I just need to match the color according to the weather or mood, which can reduce the trivial energy spent on things. And I eat salad and protein for lunch and skip the carbs that make me sleepy in the afternoon, which maximizes my productivity for the day.
You can extend this framework to investing as well.
The first part of our investment memorandum is called "Summary", and this part is only allowed to be summarized within three sentences. If you cannot accurately explain the reasons for investing in the project in three sentences, then we will not will enter into the next discussion session.
To give a few examples:
Helium: radically reduces the cost structure of building a physical WAP network;
Solana: The scalability of technology makes the ecology scalable;
Graph: GraphQL can be used for abstract retrieval, and efficient scattered reading is important for large applications;
Fractal: The NFT game market has huge potential and the team is strong enough;
LayerZero: It can effectively optimize the current very complex cross-chain situation;
Arweave: Persistent storage is a new foundational technology that unlocks use cases we could never have imagined;
Superfluid: the best solution to solve payment problems;
Serum: CLOB is the best solution to the price discovery problem;
Ceramic: a reliable decentralized database that can power applications such as dTwitter or dReddit;
Fluence：dAWS Lambda；
UXD: The most capital efficient way to create a fully collateralized decentralized stablecoin.
Of course, the above summaries are simplistic generalizations and do not include more details in investment decisions. But in fact, in the whole investment process, the confirmation of this simple concept is very important.
Every time you read an article on the internet, or have a conversation with a friend, you can cross-reference that article/talk with your entire existing portfolio in real time. And the only way to quickly process this deluge of information is to distill each investment into a minimal summary description.
And this is why the above cases are deliberately simplified to the extreme.
The most interesting of these examples is Arweave, because the "theoretical clarity" I mentioned is actually violated when making investment decisions. When we invested in the project for the first time in June 2019, the description of the project was still "A brand new storage solution! The future can be expected."
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