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Investment strategy for the lower middle class: building a portfolio with a limited budget, positioning early for blockchain airdrops, DApps

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Investment strategy for the lower middle class: building a portfolio with a limited budget, positioning early for blockchain airdrops, DApps

Cryptocurrency researcher The DeFi Edge has outlined several investment strategies with a focus on "low budget."

Original article link: https://twitter.com/thedefiedge/status/1514997156179943426

Summary:

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  • Avoid FOMO.
  • Airdrops can be profitable.
  • Focus on wealth growth.
  • Pay attention to secondary projects.
  • Analyze Alpha on your own, don't just listen to others.
  • Avoid blindly investing in blue-chip stocks.

For most people, the "standard operating procedure" should be:

  1. Focus on increasing income.
  2. Save money.
  3. Regularly invest in blue-chip stocks.
  4. Be patient, with an investment cycle of 5 to 10 years.
  5. Do not invest an amount you cannot afford to lose.

The author, The DeFi Edge, referred to as TDE, pointed out:

The harsh truth is, everyone always has a strong gambling nature, a bit like me always telling a kid not to fight, but he is always stubbornly challenging the bully, so it's better to teach him how to fight instead of watching him get beaten up.

Investment Portfolio

The core concept of the investment portfolio recommended by TDE is:

  1. Commitment to maximizing portfolio growth
  2. Diversifying the investment portfolio to seek capital preservation

Due to limited funds, only a small amount of protocols should be invested in. According to Buffett's investment portfolio, his top 5 stocks account for 75% of the portfolio. TDE recommends starting with 4 to 6 projects as an initial investment portfolio.

Expanding the Investment Portfolio

As the above investment portfolio begins to profit, it should become more diversified and balanced over time to avoid a sudden drop in all earnings during a major downturn.

Predicting the Next Wave

The goal ahead is to predict and ride the next wave, find your position, and benefit from the upcoming narrative:

  • Has Solana SOL or Avalanche AVAX risen? Who will be the next rising public chain?
  • Is DeFi Kingdoms JEWEL gaining popularity? What is the next GameFi?

Some ways to find top information include:

  • Observing whale wallets.
  • Focusing on on-chain indicators, such as USD inflows.
  • Some investors focus on low market cap tokens.
  • Switching sectors to leverage the reward mechanisms of various ecosystems.

TDE cautions:

Be wary of paid Alpha private groups with unnatural growth. They may convince you to buy in only to sell at a high point for themselves. Learn how to find your own Alpha.

Early Layout of Public Chain DApps

TDE's usual strategy:

  1. Find an emerging ecosystem with a continuously increasing Total Value Locked (TVL).
  2. Find the strongest Dapp in that public chain.
  3. The earlier, the better.
  4. Take profits.

Using last year as an example:

  • FTM -> Liquid Driver
  • Harmony -> DeFiKingdoms
  • Avax -> Wonderland

He points out that no one can predict with 100% accuracy; Wonderland eventually turned out to be garbage, and profits always come with risks. The key is to take profits early.

He mentions that there are many discussions in the market about Aurora, Cronos, and Metis, and he personally checks DApps through DeFi Llama.

Indicators to observe include:

  • Team
  • Indicators
  • Tokenomics
  • Roadmap
  • Marketing
  • Community sentiment
  • Investor institutions
  • Value proposition

TDE believes that this evaluation strategy is not useful for Solana and Terra, as the Dapps on these two public chains have not yet exploded; it may be better to simply hold SOL and LUNA.

Due to budget constraints, TDE recommends focusing on secondary projects that you believe in and conducting in-depth research, such as:

  • Understanding the Metis ecosystem
  • Becoming an expert in GameFi on Avalanche

GameFi Arbitrage

TDE uses the example of his friends playing DeFi Kingdoms and Crabada, stating that although they have no money but time, his friends spent a lot of time understanding the arbitrage mechanisms of different heroes/NFTs and successfully made profits.

He emphasizes the need to reinvest profits into blue-chip stocks and stablecoins to lock in profits.

Allocate Profits

Seeking Airdrops

Recent airdrop cases include Looksrare, ENS, etc., and the airdrops currently anticipated by the market include:

  • Arbitrum
  • MetaMask

TDE believes that using MetaMask alone may not receive airdrops, as MetaMask will focus on users who use the SWAP feature in the wallet.

There are numerous airdrop opportunities in the Cosmos ecosystem, and tracking tools like Cosmos Airdrops can be used. Beware of fake token scams.

Reducing Daily Trading Fees

  1. Coinbase Pro has lower fees than Coinbase.
  2. Holding BNB on Binance can reduce fees.
  3. Go through cross-chain bridges or directly exchange coins? Seek the cheapest way.

Reducing Gas Fees

TDE mentions that gas fees can fluctuate within a day or week, similar to facing rush hours at certain times. Users should avoid trading during peak periods, and TDE recommends that beginners use public chains outside of Ethereum, such as Fantom.

In conclusion at the end of the article, TDE summarizes common investment failures:

  • Cognitive biases/emotions
  • Seeking advice from the wrong people
  • Incorrect evaluation of Alpha
  • Investing more than one can afford to lose
  • Believing oneself to be a great investor