The chaos of DeFi
February 19th, 2022

This article is from Knower substack, who share a lot of alphas and insights. If you like the post, please give him a visit and spread the word.

“Wild, wild, wild, wild west & how to navigate it”

What the hell is a ‘DeFi’?

I hardly know anything. I don’t go to a top university & I’m not a shadowy super coder. I won’t even try and pretend I know a more than above average amount about crypto (despite what my username might make you think). DeFi is complicated, and it’s okay if you don’t understand it - I surely don’t know every little thing. However, you’ll be at a huge disadvantage if you don’t participate. But who likes making money anyways?

I believe that DeFi (or for the uninitiated, Decentralized Finance) will prove itself to be Crypto’s greatest contribution to the world. Yes, Bitcoin is and will always be great - and maybe one day it’ll be seven figures, too - but there’s no denying the almost endless possibilities DeFi can provide.

If people thought getting third world countries to buy Bitcoin was cool, wait until they make it a goal for every individual to have a MetaMask wallet. DeFi could probably end up reaching all 7 billion people one day, assuming we’re able to get everyone internet (and maybe clean water, but that’s a lot less profitable so nobody really cares).

But that’s all besides the point. DeFi as it is right now can make you a lot of money. In terms of TradFi returns, you can absolutely kill it doing almost the bare minimum. I’m like 90% sure you could just stake CRV on and use the earned cvxCRV to get 3CRV, CRV and more CVX and fucking demolish any fund manager. Even on a huge amount of money this could work, so don’t say that this is only applicable for 6 figs or under, because it’s good for just about anyone.

Yeah, but maybe you don’t care about TradFi and want CRAZY returns. Well, this article is for you. Sit back and grab a notebook, because you might need one. I probably won’t get too technical because I’ve been really busy with school, so keep in mind this will probably be a very nontechnical read and more of a teaser to get you to explore what’s out there.

The players of DeFi

There is a lot of money out there, and each day more gets printed. This will never end. The traditional financial system is, has always been and always will be a gigantic scam. An abomination meant to destroy everyone who isn’t the 0.001%.

DeFi fixes this.

Just kidding, of course. We can never take down the shadow banking system and dismantle TradFi, but we can try, right? We might never make it past where we are, but why not try and get rich in the process?

DeFi doesn’t have a Blackrock or Larry Fink (yet), but we do have Curve Finance and Degen Spartan. You’d have to be goofy to think that we’re early, because we’re not. Any major investment bank or institution with a ton of money has probably been hiring DeFi/Crypto analysts out the ass this past year, and if they haven’t, well, you fill in the blank:

They’re NG_I.

Just look at Convex’s TVL (total value locked), and pull out a calculator. They denominate it in 5 figures of millions, and for all the brainlets out there, that’s BIG billions (eight figures to be exact). And that’s just one protocol.

In addition to Curve and Convex, we also have (take a breath) Yearn, Sushi, Compound, Aave, Popsicle, Rari, Uniswap, Olympus, Wonderland (or abracadabra I don’t even know) and many more that I’m probably forgetting. I haven’t used everything, but I’ve done a very fair share of due diligence in this space. Chances are you’ve heard of at least one of those too, or seen a Twitter username with “(3, 3)” in it (or some variation of that). Maybe you’re patiently awaiting Yearn Finance’s supposed Hentai, or have been staking $OHM and earning incooooom.

Everything is interconnected, and the more you see the bigger picture, the more sense things will make. Sure, a lot of these founders bicker with each other online, but at the end of the day, they all share the same goal: make lots of money.

All of these protocols have a lot of money. Some have a lot more. Some are brand new. Some are battle tested, and some will probably take some hits in the months to come. What do they all have in common?

They can make you a lot of money if you play your cards right.

Internet alchemy 101 (kinda)

I’m not smart enough to go cross chain with a lot of these looney yield farming opportunities. I’d imagine there are some absurd ways to get an out of this world yield on your money, but I can’t provide that. But I can provide you with the means of getting to that level of magic internet alchemy.

Try and fuck around on as many protocols as you can. Set aside a portion of your portfolio for screwing around and learning, and make an Excel sheet in the process. Try and determine what does what, and which pairs give you the most opportunity. See an opportunity on Solana? Take it. Don’t feel confined to one network, as there’s a large enough market for multiple to do well simultaneously.

Spoiler alert: Unless you have around 7-8 figures already, you probably won’t become a billionaire this cycle. And there might not even be another cycle after this. It could all go to zero or we could end up in some weird TradFi up-only type cycle that takes years to reach its peak. None of us know.

There’s no shame in blowing a little money fucking around in DeFi, because almost anything you do could be super beneficial. Maybe you notice a glaring hole and hack the fuck out of it. Maybe you spot a market inefficiency and arbitrage it. Maybe you build something yourself. These are valuable experiences that can only come through - wait for it - experience.

Sure, you might lose all your money. But do you really have a lot in the first place? Why not risk it all to win it big? Maybe one of the new protocols you try out will airdrop a token or something, but what do I know? Just try not to lose all your money on one of the quintillion Olympus forks out there. I get it, you like the idea of protocol owned liquidity and a big treasury (so do I) but the rugs are imminent. Be safe out there. Aside from $OHM, which deserves a post of its own at some point..

I’ve spent a more than generous chunk of money on Ethereum gas fees, but I’d do it again in a heartbeat (or would I?).

Not only have I managed to gain knowledge on the wizardry of DeFi through this, I’ve been able to *gasp* turn a profit. I’ll admit that a lot of this came from blind luck, but who’s to say you can’t do the same? A few months ago I’d put some money in $OHM without really knowing what it was, and look how that turned out?

There are a ton of pools that need liquidity, and maybe you’re the one to provide it. APRs and APYs will be very high in a lot of these, and maybe this can benefit your constantly growing net worth. Try and scope out pools that are off the beaten path on these protocols, and see what coins have potential upside, too. Sure, 234% APR is nice, but it’s also pretty cool when the underlying appreciates by 1000% in the process.

More than likely there are tons of opportunities on Avalanche and Harmony ONE, and I’m surely missing these. Maybe it’s $SB or DeFi Kingdoms, I dunno, too lazy to bridge honestly. There will be many more opportunities, so just keep both eyes open.

I’m like 99% sure that DeFi has yet to really *explode* in the way everyone would like it to. Once more people catch on and see what’s out there, I think we see a real DeFi super cycle. This is all just speculation, of course, but there’s no way that this stays under the radar for long.

My best advice or “alpha” is to literally do and learn as much as you can RIGHT NOW before it’s too late. As much as people on your timeline want you to believe it’s over, it isn’t. While they’re obsessed with cashing out into USD, go stack some more coins and earn more yield.

You want to be the king or queen of DeFi, you need the coins. Go get them.

Parting thoughts

As I was writing this I realized I know less about DeFi than I thought. I am not an expert. However, I think I gave some decent insights for those who aren’t able to sift through hectic Twitter feeds and decipher the psyops.

That’s another word of advice: purge your timeline. Unfollow anyone who doesn’t contribute to your knowledge base or make you laugh, because the more you interact with them, the less enjoyable or useful your feed becomes. This has helped me a ton these past few months.

Going to try and come up with more to write about, because I’ve barely scratched the surface on what DeFi is capable of and has accomplished. As always, share this with a friend and have them share it with a friend and have them share it to a friend and have them share it to a friend and have them share it to Gary Gensler.

Also, only reason I chose the article photo that I did is because it looked like a future I want to be part of.

This article is from Knower substack, who share a lot of alphas and insights. If you like the post, please give him a visit and spread the word.

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