An Important Question Investors Need To Consider
Even if you are merely making use of a DeFi protocol such as Beefy Finance or Autofarm, you are still investing in the project. It is perhaps the user that is the more essential investor, as use case and adoption is at the heart of creating value for any project, not just DeFi. Recently I have been looking at a number of DeFi projects that I can get involved in at the ground floor. For many of them it is perhaps a bit of a speculative gamble but I have been able to offset that risk by ensuring that I can earn a significant return on the asset. That return is then compounded by a fairly high APY. Anyone that has utilized DeFi protocols is aware that early entry is imperative to significant success, as yields depreciate fast and those yields Need to be compounded with the highest APY possible.
Recently Leofinance released CUB Finance, which I was able to jump on within the first hour of launch. I began by farming CUB with various assets I already hold and then began to buy up CUB as the price proceeded to fall into the $3 and $4 zone. This is perhaps the project that I hold the most hope for, as the team has already been around for years and is publicly known. Many projects may disappear in the not so distant future and I want to do my best to try and seek out the winners.
My thinking is fairly simple, if I am able to get in early then it is highly unlikely that I will suffer loss. In the event that a project later collapses, compounding at a high APY will most likely protect me from loss.
DeFi Speculations
There are a few other projects that I was able to pick up early, which are already up hundreds of percent, prior to anyone really knowing anything about them. Some of these include Whirl Finance, as well as Kind Cow Finance. I currently have KIND locked up and earning more KIND. Vaults are on the way for WHIRL, so I am simply holding these until I can farm with them. Compounding returns from the initial launch makes a tremendous difference to your returns. Portfolio allocation and construction is very important here, especially as gains will be massive for projects that survive. This in turn only requires a modest investment, which means that the percentage of my portfolio that is at risk is almost zero. This is further protected by compounded returns and makes my risk/reward ratio very favorable.
Another aspect to consider is that DeFi may mature and change significantly in the next 5 years. This would require existing projects to also adapt and could possibly also include the death of even successful projects. There is a lot to take into consideration but it should not hinder one from acting now. Being active in many avenues also enables one to capitalize on the trends.
Needless to say I am quite excited about the future of CUB Finance and believe that once it moves outside of the LEO community, it will also see significant growth. Still to be listed on CoinGecko, the project only really has exposure within the Leofinance community and those they choose to share it with.
Another project I am testing out at the moment is DeFireX, which is predominately focused on stable coins and could be a very viable channel to have up and running in a bear market. There are a number of others I am also testing out that are not listed on CoinGecko or CMC at this point. These have literally just launched and in some cases, farming and staking is yet to commence.
Please remember that this is my personal approach and should not be considered financial advice. DYOR, especially in the DeFi space!
