My DeFi yield farming experience

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2 years ago

Experience often times, the bitter one(s) is usually the best teacher. However in retrospect some bitter or unsavoury experiences are unnecessary or needless especially when one has the opportunity of learning from the experiences of others who have charted the waters one intends to set sail on. Someone wrote somewhere:

"If you do not invest your time and energy to learn about what you're about to get into in the crypto space , you'll end up paying (dearly) with some part of your portfolio" ( the quote has somewhat been paraphrased ).

My first encounter which continues to remain my fondest experience with yield farming has been with Pancakeswap specifically its staking pools. I have been staking Cake to earn other tokens for quite sometime and it has been quite a rewarding experience. JulSwap has also been great for me thus far considering my little stake in the platform via providing liquidity. The aforementioned yield farming platforms are ranked highly for me amongst others.

They may not offer sensational APY's but they offer stability of sorts in terms of somewhat consistent APY which is though still subject to the general atmosphere in the market. Their staking/farming interface are also quite simple to use without confusing new users. I was earning appreciably from both platforms prior to the commencement of altmania. I was swept off my feet by the tempting and mouthwatering APY's coming from newer yield farming platforms which were popping up in the midst of the present alt season.

I failed to keep my emotions in check . I therefore FOMOed into two of such new platforms. This move eventually turned out to be a bad one which I have come to regret. One of the most traumatic experiences for investors in the crypto space is buying the top and eventually selling the bottom usually at loss which could sometimes be huge. This was the mistake I made in the first of my misadventures. I had come across a project which seemed quite promising at the time which offered APY's in the thousands and decided to opt in .

To my utter dismay barely 48 hours after swapping to get the platform's token and staking them, the token's price started to decline. Initially by a few cents, then all of a sudden it escalated to hundreds of cents (that is dollars). Within a few days of the commencement of the drop in price, the token lost about 93 % percent of the value at which I had purchased it. I was appaled by the turn of events and eventually opted to salvage whatever I could of my investment and move on as dwelling on my loss would be of no benefit. As at the time of writing this piece, the token in question had increased in value by about 6% with % loss of my entry price being 87%.

While I was still recovering from the shock of the first failed investment, the second platform I had emotionally invested in at the height of the first peak of the alt season began to falter in a manner similar to that of the first failed investment. However the rate of depreciation in value was more dramatic than the first. Within a few hours, the token dropped in value by more than 50% of my entry price. As the hours went by, its value continued to dramatically decline such that in less than 48 hours, it had lost about 96% of my entry price. After much thought I sold off the token at a miniscule price and incurred a huge loss which would have risen to about 99% had I persisted till now.

I have learnt the hard way from these two failed investments to NEVER be carried away by emotions when making investment decisions. There is a high chance of making bad investment choice when one allows emotions to prevail over intellect especially in the crypto space. Do not rush into any investment, irrespective of if it is being hyped or not, rather do your own research and ensure that the project has no red herring.

If anything seems suspicious or out of place, it would be best to steer clear or better still hold off plunging in to invest until all doubts are cleared. Do not FOMO in, other investment opportunities will surely come. It will only be a matter of time and exercising some patience.

It is also a good idea to be a member of the official social media channels or follow the handles of any platform or token in which you intend to invest. This will give you an opportunity to see the fears and concerns of other investors or would be investors so that you can be properly guided in arriving at a decision to invest or not.

Another strategy to protect onyes investment in yield farming platforms is to provide liquidity via stable coin pairs if such option is available. This approach protects your stake or investment from price volatility but is usually at the expense of a much lower APY which in my opinion is a fair trade.

On a general note, yield farming platforms are high risk investment opportunities and it would be wise to always keep this famous rule to heart

"Only 10x what you know you can afford to lose"








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2 years ago