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6 months into DeFi and Crypto, here’s what I’ve learned—

Hey there everyone, this is going to be a long post.

Been a longtime lurker and I’m thinking my karma is finally high enough to post.

I’ve spent six months now in this space (which seems like a short time but really feels like two years), been through the highs and the lows.

I wanted to do a public “debrief” with the aim of informing others who are just starting, and also to collect my thoughts so I can learn better. Without doxxing myself of course.

My first crypto buy was Bitcoin back in January, and yes, it means I got it for under 35k or something. And I traded it in the following weeks for about 10% gain each trade. My take on crypto was: it’s highly speculative, very risky, and you should only commit a small amount of money to it, but you shouldn’t commit 0.

Lesson learned, I also bought ETH for under $800 an sold it for $880 or something.

So when I first discovered DeFi projects in March, I started to see the real potential of adding more crypto to my portfolio. After all, what if crypto is not just a speculative asset, but part of an ecosystem with competitive benefits compared to banks? Then its true value, its fundementals, would be much higher.

So slowly I got to know more and more about it, and that eventually resulted in my “all-in”. I decided to put most of my savings into ETH and started using ETH apps.

My first mistake: underestimating transaction costs.

It feels easy to click buttons and do things on the Ethereum blockchain, especially back when 5-15 gwei was the norm, and transactions took maybe 3 minutes to confirm on average. But man was it expensive.

All in all, in my first three months of DeFi I spent 1.5k USD on all my transactions. I had invested less than 4k at the time. It was devastating to realize that, but I came to terms with it and moved on. That’s also what got me more interested in projects that saved gas cost like Dracula.

I was getting the hang of providing liquidity on Sushiswap and collecting sushi rewards, but I was still heavily in the red. Then one of the worst things happened: one of the tokens I was holding took a 90% plunge. I was devastated. My 3k was now 300.

But I collected my thoughts and sought to understand where it went wrong. I looked at the numbers on etherscan. One advantage of the blockchain is that you can always see what was happening, if you could make sense of the data. I saw that 99% of the token holders were still in, which meant the community still believed in the project, and long story short, I decided to become more active in the community.

I wouldn’t say I was “fighting FUD”, but mainly I presented the numbers and facts, as well as learn more about how the protocol and space worked. I was eventually doing copywriting for the project, and even got offered a position.

This is where I got the drive to continue. I saw that a community could hold on strongly even after a 90% plunge, so long as the facts were presented, and the devs come clean.

So I continued farming on ETH. It still wasn’t profitable due to the gas cost, but every new token I farmed helped me understand a little more about the Ethereum economy. I look through and researched about 15-30 projects a month while farming on Sushiswap. Every onsen launch was an opportunity to learn.

One of my regrets: not getting into OHM when it was still in the early liquidity mining phase on Sushi.

When I discovered Polygon, and moved my funds over, that was a breakthrough. Suddenly, I could use the protocols that I’ve been hearing about all the time, but we’re too cost-prohibitive to use (due to the ratio of gas fee to earnings).

I used AAVE, Curve, Sushi Kashi, and more for the first time on Polygon. And it was beautiful. All the research I had done, I could finally see it in action.

Also the fluidity of funds in Polygon is amazing. You can switch your tokens from one farm to another in a flash. And it basically cost nothing. I was able to get in on Polycat when it was still $5 Fish, and rode it all the way up to $50. I was also in $1. 45 Titan, but we all know how that turned out.

Basically, Polygon was like a special commercial zone with low taxes. It invited innovation, but unfortunately also profiteering. A lot of sketchy BSC inflationary farms came in and started crowding the space with nonsense tokens.

I can’t lie though, it was insanely profitable for a while. And through the market downtime of April-May, I still made around 5-7k in profits, because polygon tokens were mostly pegged to stables.

I rode one shit coin farm from an extremely profitable launch, right into the ground in 24 hours.

I also got in deep with Iron Finance V1.

I was getting wary when mcuban got in on Titan. I sold my pot and put half into Terra LUNA, and kept the other half in stables.

I should’ve stayed out, because the next thing I knew, Titan plunged back to 29 and I was buying back in, hoping to get a quick profit.

And that would become the transaction confirmation screen that haunts my dreams for the rest of my life.

I slept soundly too, believe that this dip would correct itself just like the many others before, that Titan was “too big to fail” at 2.x Billion liquidity.

All of that vanished the next morning. I couldn’t say anything. It was 0.

Honestly I kept it together for longer than I thought. I wrote a post on my personal insta about lessons learned, and I checked on my other funds just in case. They were safe.

But I had lost close to half my net worth that day. And all within 8 hours.

It wasn’t until I called my partner and told them about it that I could cry out loud. But that felt good. I could finally talk to someone about it.

Even though most of it is money I didn’t have before DeFi, it’s still a good year’s worth of salary to me. It represented future possibilities, moving abroad with my partner, or putting a down payment for an apartment. Finally coming to terms with that gave me cathartic release.

Anyway, I wasn’t perturbed. I knew my risks going in, I just wish I followed my own advice a bit better. From then on, I decided to write my own investing rules. For example, no trading on my phone. No re-entering a project that I just exited, because I probably exited for a good reason.

Anyway, I started investing in stuff I really saw long term value in, and that’s given me a lot of peace of mind since. I don’t watch the price as closely anymore, cos that didn’t matter to me as long as the team behind the token was building things and had sound ideas. That’s what got me to invest in LUNA and the Terra ecosystem, and finally, that paid off recently when it hit $9.

I knew it might be temporary, and yeah, at the time of writing it’s receded back down to something like $6.30, but I still believe in it, and I trust my convictions and instincts.

I realized that community has value in DeFi. Dracula, BAYC, Punks, and OHM would be nothing without their stalwart meme lords and smoothbrained APR-crunchers. I make sure that every project I’m in now has a great community that’s able to welcome newcomers, and also discuss high level tokenomics while explaining it to layman terms.

I’m also invested in a few other projects that I think have long term value, and I’ve reduced my Polygon holdings to less than 1/5th of what it was before. Most of it is in Balancer, which is simply a great way to diversify your assets.

The rest is in a dividends contract with a yield aggregator.

I’m not done with farming coins, but I’m definitely allocating my risk better now. I think TITAN was my biggest lesson to date, and though I wish it did not happen, I still got something out of it. From now on, my instincts will be sharper, and my nose for good/bad fundementals will be too.

Most of my journey and thoughts I post on Twitter, including a spreadsheet and guide on how to use Mirror Protocol V2. You can check it out at [Twitter](http://www.twitter.com/DrCle4n)

I hope that this thread was a good read for you, and that you gain something from my experience.

If you’d like to have a conversation, or if you have any thoughts/questions, do feel free to comment, or drop me a DM on Twitter where I’m more active. I’d love to engage with you.

TL;DR I spent six months in DeFi, got rekt multiple times including with TITAN. I recovered, learning from my mistakes, and started investing in long term projects instead, especially the ones with a great community. Since then, I sleep a lot better.

What do you think?

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22 Comments

  1. Great story, thanks for sharing. However, you must have been making so many transactions to rack up 1.5k in three months. Did you not think it was a huge issue at the time?

  2. Thank you for the post.

    What do you think will be the most optimal way (risk/reward ratio) to earn passive income in DeFi in the coming months?

    I consider ETH staking, but still have a lot to accumulate until I can afford a full node. So looking into how I can make my ETH work until I have enough if it.

    What’s your opinion of CeFi? Celsius and the likes.

  3. I think everyone on this forum has had an experience like the one you had with Iron v1. What has saved me a lot of $ is this mentality: just outpace the average return of the s&p 500 (20 yr average is just 7%). This should give you conviction in DeFi because even most CeFi stable farms can offer yields higher than this, but right now I’m in a mix of stable pools with the best APR one being on Balancer. Knowing that I’m taking care of my funds in stables, I feel ok using 5-10% of my holdings on degen plays to fuel the gambler side of me. Hope this helps!

  4. Something good will always come from a bad experience. Glad you had this experience early and the sour way. Can’t imagine what this space will bring next, from ICO to defi to nft to..

  5. Honestly, whenever it’s been too long since my last time getting rekt I start to wonder if I’m losing my edge. If you’re not testing in prod you’re getting complacent, not keeping up with all the new development.
    The lesson over time isn’t to stop taking risks it’s to keep your allocations reasonable. Don’t let any single failure take you out of the game. Just stay curious and play all the games, hopefully even take home some wins.

    …is this me getting ready to justify spending all my eth on the next dumb nft project? Probably yes. Ideas for shitcoins

    Squirrel School NFTs
    Polymorphin DogeTurtles

    Rainbow Wizard Protocol (liquidity farm lending saving DAO pools capital efficient machine learning storage mining project)

  6. Thanks for the nice sharing. I have also been affected by IRON, and I remember the night when I checked it was ~40 and went to bed :(.

    I cannot agree more on community and team commitment, especially in a bearish condition. I am in Augury as it gives me strong confidence in this sense, and hope it can stand the market 🙂

  7. You should post this in r/CryptoCurrency lot of people will read it and can learn from it.

    You’re not the only one that made mistakes man, trust me. I got rekt after making the most money I have ever ever seen ever. Been here since late 2017, DCA’d for 3+ years. I did everything right as a long term investor up until the very end. Smh Idk what else to say, the money got to my head. Long story super short, I took profits too soon, got back in at a really bad time, freaked the hell out and sold. Lost about 2/3’rds of my gains LOL. I tried getting in again and again but I had cold feet, eventually realized I was just gambling and I decided to stop.

    Still up in the profits but I was soo angry with myself and I actually sought out for a therapist. It was bad at the time. Lot of depression and spontaneous anger. I would be just chilling and then one second later be throwing shit around almost uncontrollably. I’m good now. But yeah man, you’re not alone, many have made mistakes this year. And many are making mistakes now and will make mistakes soon. The important part is that we learn from it and continue our journey.

  8. I learned a lot from this post. My major loss would be Juld and Julb (Julswap). It seems I’m too optimistic about some good projects that I don’t know when to take profit.

  9. Hi. I finally want to dip my toes in some alts! But the main exchanges don’t sell a lot of them. My questions are

    – What wallet do you use? Like I want one that can hold the largest variety and remain interoperable

    -Where do you buy? I need a fiat on ramp but have only ever bought into BTC. I want to transfer a balance into stablecoins and then buy into different projects but I’m wary of some exchanges.

    Thanks in advance for your recommendations/advice!

  10. Really long post but it was absolutely worth the read. Safe to say your experiences made you. I just wish you had some kind of guide on the way. An app or a project to help you navigate, to help you make calculated decisions where risks and rewards are concerned. Cheers, bro.

  11. Thanks for sharing your journey. I remember seeing your posts about Dracula, you write very well, congrats. Looks like you really fell in love with the crypto space.

  12. Wow what a roller coaster..thank you for sharing! Defi has so much potential, but is still so young and theres definitely a lot of risk. It’s really cool you learn from each failure and are able to bounce back. Kudos.

    I’ve only been in the space since April, got into crypto after watching a video of Charles Hoskinson (I know there’s a lot of love/hate on the guy, but he knows his stuff) on YouTube. He spoke of crypto and its purpose and Cardano’s mission to bring financial services to those that are denied access. It drew me in immediately and I started investing into ADA.

    I saw people mention Terra LUNA too and bought into it without really doing my DD. When LUNA crashed I panic sold and took a heavy loss cause I had no idea what I was holding. Since then I’ve been researching Terra a lot and also actually using Anchor and Mirror. Now I’m just re-accumulating LUNA. I guess the lesson I would like to contribute to this post is the importance of understanding your investment. Otherwise, you become paper hands when markets fall and you end up regretting it.

    Also even though I’m super bullish on Terra now I’ve purchased some insurance for Anchor from Nexus and for UST depeg from Unslashed. Idk if you’ve done so as well OP but it might be worth considering too! Can’t be too safe in crypto…

  13. I feel for you man, thats a shame to get caught in 2 but projects that rekt like that, bad luck man or is it ? it seems like a heck of a lot of projects are getting rekt in one way or another,

    I just got rekt in polybunny, 2nd flash loan attack in a month, they are going to try to make things right but it appears it will only be a $1 for every $7, but this last attack is diluting the payback for the previous attack payouts and the same dev group is just launching yet another dApp QuBit.

    I hear Iron is going to restart. It does seem like many defi projects are being exploited. It does make me wonder if the risks are really defined in this area. I mean a silly sounding clone of pancake swap had $34m TVL, that is a huge amount money (maybe not huge in Defi but big by anyones definition.

    They all say invest at your own risk but reking $34m and saying “oops, we told you it was risky” is really no excuse at this level of money. There is always some disclaimer on every crypto related site and yet do we really know the risks ? Any other business that I know of when there is that kind of loss, rug pull etc the police are called, people end up being charged or sued. Is “invest at your risk” really a stay out of jail card ? Cant sue Binance for going down right at the ket moments of the may crash. It may not be criminality , could just be incompetence, cutting corners, bad testing before rollout etc.There is no liability to any of this. Because its the wild world of crypto is that really any excuse ? It may be decentralized but does that mean zero accountability ? and when does it mature so its no longer some nutty free for all ? There is too much money at stake.

    In 2014 MT Gox shut down and $450M was lost, have things really changed since ? is this kind of crap just going to keep on being acceptable ? I dont know if the devs behind bunny are in on the theft, incompetent or if there are inherent faults in these kinds of contracts etc Bunny investigated itself and is just carried on with new development with no accountability other than their reputation and price of the coin which the buyers are taking the hit on.

    But that will be forgotten, noobs or people who had never heard of these projects will look at the TVL and say great, love it. Heck even amongst the rekt many are wondering if we should buy in at the new low price.

Reflections

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