22 Crypto Lessons Learnt in 2022 by Nick Frontera.
1. DeFi is the only way forward.
Most of this year’s major collapses were a reflection of human nature, not the underlying technology.
FTX, Celsius, BlockFi, Voyager, Genesis to name a few.
The need for DeFi is clearer than ever.
2. Nothing is too big to fail.
LUNA was a top 5 L1, FTX was a top 3 exchange.
Don’t let the size of a project mask its vulnerabilities.
If the mechanism is fundamentally flawed, size isn’t going to prevent an inevitable collapse.
That leads me to my next point. 👇
3. If a mechanism is broken, it won't work - no matter how big it gets.
A friend of mine made this point in a recent interview with me and it stuck with me.
Make sure a mechanism is sound BEFORE you invest, and don't let market caps blind you from potential flaws.
4. Don't HODL blindly.
Re-evaluate your thesis on a regular basis.
For example, every month go through your portfolio and ask yourself:
A: Why am I holding this token?
B: If I wasn't holding, would I buy this token right now?
If you answered no to question B, then you should re-evaluate your position.
Remember, holding a token is the same as buying at that given moment (opportunity cost).
5. Algorithmic stablecoins don't work.
To date, we haven’t seen this model succeed for any substantial amount of time. So far, every attempt has failed.
UST, Bean, Waves (USDN), USN just to name a few.
Fully understand a stablecoin’s design before putting a cent in.
6. Not your keys, not your coins.
This famous crypto phrase has proven true once again.
With the downfall of many crypto exchanges and centralized lenders this year, the importance of self custody is more pertinent than ever.
Get a ledger, and always store your own assets.
7. Timing the top (or bottom) is impossible.
Almost everyone that tried to predict the top was wrong.
Why? Because crypto is beholden to the macro environment. No one has an edge on macro.
Implement risk management, and stick to a plan which doesn’t require timing the market.
8. Chase real yield, not fake emissions.
If a project is paying a juicy APR, ask yourself:
• What is the source of the yield?
• Is the yield sustainable?
• Is the strategy delta neutral or does it involve a directional bias?
Finding real yield should be your priority.
9. Beware of single points of failure (systemic risk).
LUNA’s entire mechanism relied on UST adoption.
When it de pegged, LUNA collapsed.
Identify if a project relies on a single variable, and be well aware of the associated risks.
10. Don’t worship cult figures.
SBF, Do Kwon, Zhu Su etc. were all lauded for their genius.
This blinded many people’s views on their respective projects.
When they failed, their tokens went with them.
No one in crypto is untouchable.
11. Rotating isn't the same as taking profits.
I got caught in this trap a few times.
1. Make a 10x
2. Rotate into another project, make a 5x
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