How to Build Your Crypto And DeFi Portfolio.
Your crypto portfolio is neither growing nor reducing because you don’t know how to build a sustainable crypto and DeFi portfolio.
Perhaps you don’t have time to build one.
Take out a spreadsheet, pen, and paper. Write down how much BTC and ETH you have.
Am I okay with that level of risk?
How would I feel if my portfolio dropped 60%?
If it would make you feel highly uncomfortable and scared and cry, then adjust your portfolio accordingly.
To build a successful crypto and DeFi portfolio, I will share practical tips (strategies and Alpha information) used by successful yield farmers to earn a passive and sustainable income.
It doesn’t matter if you’re a newbie or oldie in the DeFi space.
When you come into the DeFi space, the first thing that comes to your mind is how fast you can multiply your capital passively without risking so much of your capital.
So when a coin with high APY is being shilled, you get triggered to FOMO into it only to lose a chunk of your capital, if not all, then you would say that the DeFi industry is not for you, then you jump out of crypto or into another niche.
Yield farming can be risky due to price volatility, rugpulls, smart contract hacks, bank runs, etc.
However, successful yield farmers do not run away from these risks; instead, they manage them by picking a realistic strategy and doubling down on it.
Despite what “gurus” might tell you, your strategy will always be unique and custom to your situation. More specifically, it comes down to:
1. Your personal goals
2. Your risk tolerance
3. Your time commitment
YOUR PERSONAL GOALS
Before investing in yield farming in DeFi protocols, you have to establish a clear goal that defines what you want to get out of the market and stick to it.
“DeFi protocol means any platform on which people can lend, borrow, stake, and provide liquidity. Examples are AAVE, Compound, Uniswap, Sushiswap, etc.”
Some people want to make as much money (retirement fund or to fund their lifestyle) from yield farming, while others are interested in the innovation coming into the DeFi space.
If the former is part of your goals, you should consider the following.
- How much money are you willing to invest (and potentially lose)
- Do you prioritize generating income over investing in a coin’s mission?
- How long can you survive without the money you invested in yield farming?
- What is your net worth?
YOUR RISK TOLERANCE
Too many people are aggressive in their investment and getting “rekted” or playing it too safe and leaving money on the table.
The following are different risk tolerance levels.
CONSERVATIVE: Conservative yield farmers are more concerned about preserving their capital and very comfortable with their low risk and low reward model. They look out for low-risk farms like AAVE, Curve, Uniswap, and others to invest in.
PS: Low-risk farms are DeFi protocols that have been around for a minimum of 9 months, with more than $500 million TVL (Total Value Locked), have undergone several audits, and have at least 30k active members on Twitter, Discord, or Telegram.
You can also attribute USDC, ETH, and BTC to low-risk coins.
MODERATE: This is a middle man. A little dose of conservative and aggressive risk tolerance. They risk 50% of their portfolio on high-risk farms and 50% on low-risk farms.
AGGRESSIVE: These types of investors always seem to be the crazy ones. They have a high-risk appetite and are comfortable losing half or all their capital on high-risk farms.
PS: High-risk farms are projects that don’t have significant value in the long term, such as OHM fork. It is more like a Ponzi scheme.
The goal here is to enter early enough and sell higher. If you couldn’t catch it when they were low, your money will be used as an exit strategy for early buyers.
None of the risk tolerance practiced by various successful yield farmers is better than the other. Each of them makes a lot of money in the DeFi space.
Choose one that resonates with your temperament and double down on it.
The area of concentration is that you research and analyze projects before investing in them. You have to keep in touch with their news channel to keep updated to know when to sell, especially when the team members are drifting from their initial goal.
YOUR TIME COMMITMENT.
Successful yield farmers are good researchers. They spend 4–12 hours daily researching and analyzing projects. They follow trends to see how they can quicken the process of building their portfolio.
They have good research skills and are active users of Twitter. Through Twitter, they get some of their Alpha information about a project.
Some yield farmers barely have the time to be active on Twitter, so they outsource this to an experienced researcher like me.
You have to understand your risk appetite and approach the market that way. If you are a conservative investor and try aggressive risk tolerance, you might be lucky, but you might fail.
Luck is not what successful yield farmers use to create wealth in this space — the year in and year out.
What Should You Include In Your Portfolio?
It’s not enough to be a bitcoin maximalist anymore and hold your asset. With how fast crypto is moving forward and the number of projects being launched, you’d miss out on so much.
But it also wouldn’t make sense to make your whole portfolio 30 shitcoins and hope one goes to the moon. So there needs to be a balance.
You have your:
Stablecoins: Preserves capital & serves as ammo to buy dips.
Blue chips: Long-term growth. Long-term hold.
Medium Risk: A nice balance.
High Risk: Your 10–100x plays. Make sure that you take profits.
The right strategy (40:40:20) for most people is divided into three approaches which are;
- The Right Strategy For Most People — Especially Beginners
It’s a strategy that works for most people, especially if you’re entirely new to this world. And that’s the 40/40/20 strategy.
20% Other Tokens
Other tokens could be ATOM, MATIC, BNB, or whatever you’re bullish on.
2. The Right Strategy For Most People — Especially Advanced People
This strategy works for the most advanced people in the crypto space — these kinds of people are not newbies, but they are not making as much money as they should.
40% Stable Coin Farms
15% Other Tokens
5% Degen High-Risk Plays
Other tokens are other projects you’re bullish on a medium and long-term timeframe. These projects could be ATOM, MATIC, etc.
3. The Right Strategy For Most People — Aggressive Risk Tolerance.
As explained by David Malka here, https://youtu.be/Vv9d8wnzd50?t=1463 This strategy is for advanced people with a high-risk appetite. One strategy for playing the high-risk or Ponzi game in the DeFi space properly is this:
The best time to enter these high-risk farms is between 7–14 days of token launch when it hasn’t been pumped yet, especially when the market cap is below $10 million.
Most times, the market cap is not available on Coinmarketcap or Coingecko. Join their Discord or Telegram group and ask for their market cap; you will get a response.
When to exit?
When you eventually see a pump, or some profits, take out your capital and some profit first. You can decide to be greedy about what is left.
This is how to approach high-risk rewards, and you have to recognize them for what they are and be a ruthless farmer with your strategy.
These are good strategies, and it depends on your risk tolerance, personal goal, and how much time you can commit daily to building your DeFi portfolio.
I get many inquiries from doctors, lawyers, bankers, individuals, and entrepreneurs who don’t have much free time to build their crypto and DeFi portfolio.
They want something safe and reliable, and they only need to check an hour per week.
I am a full-time researcher who sleeps and wakes up on Twitter looking for Alpha information and “degen plays” with huge potential upside.
Email me at firstname.lastname@example.org, and let us discuss how to build a sustainable crypto and DeFi portfolio for you.
Quincy Ememandu is a Crypto Researcher and Content Writer. He has Ghostwritten several Twitter Threads and Blogposts for clients.