Decentralized Finance

• I define this as *new financial tools, mediated through smart contracts, with a blockchain specific version of the Ethereum Virtual Machine, which allows the investor to earn yield larger then other available methods.
• Yield has become a bad word these days, as so many Yield Farms were scams, rugpulls or frauds.
• And of course during the bear market, the price of most decentralized finance project > project tokens has fallen to very low valuations.
• Even project tokens like the UNI token on Ethereum have shed 80-90 % of their value in the Bear Market* , so investors are very excited about earning yields. And that is the Paradox I would like to talk about today.

The Defi Paradox

• In my mind, I understand that people who bought DeFi tokens like **Cub on Cubfinance at or around the market high are holding tokens which lost 90% of their value in the Bear Market. So they are reluctant to buy more of these tokens.
• But that is the beginning of understanding the DeFi Paradox.
• Because at the height of the Bull Market these investors were earning 80-100 Cub per day, which was around 40 dollars a day. BUT now that same investment is worth 10% of what it was during the Bull Market, and generates earnings of 4 dollars a day, which is a tiny fraction of what it generated during the Bull Market.
• So I completely understand why some are reluctant buying Cub if they only look at current earnings.
• However, at todays prices you can easily buy and accumulate enough Cub to double, triple or even 10x your Cub holdings.
• Meaning that in the coming Bull market you could be earning 2x, 4x or 10x what you made in the previous Bull Market.
• Some might call me over optimistic, but I see this Bear Market as an opportunity to set myself up for large earnings during the next Bull Market.
• Oldtime Bitcoin Holders frequently say that the fortunes we seen being made in the Bull Markets were built during the previous Bear Market and I am beginning to understand what they meant. They are referring to this Paradox.

• Bear Market DeFi Paradox. Yields are down now, and the tokens are cheap and undesirable. But during the next Bull Market token prices will rise, and dollar yields will go up. So instead of 4 dollars a day at two cents token price, 40 dollars a day at 20 cents, or 100 dollars a day at 50 cents a token.
• I know 50 cents feels a long way off, but that’s 25x in a DeFi Economy which broke all previous economic record by increasing values 1000x in one year. Now past performance isn’t a guarantee of future performance, but we don’t need 1000x or even 100x, 25x would be fine. And 25x seems attainable.

This is the wild, wild west of finance. You can lose all you put into it, or you could become rich.

• I admit this is not easy, because not every project that lost a huge part of it's value in this Bear Market will recover in the next Bull Market.
• Some tokens will never recover and the projects will die. Which means an investment into them now is dead money.
• The trick is picking the right project, and the right token.
• Rememeber that tokens do go to zero, just like they do go to 100.
• Things like token utility, token development, community involvement and others are things which helpful to determine value. But even these can be present and the token price will languish.
• So marketing, and luck are also very important.
• Investing is often looked at as better then gambling, but the more you learn and the longer you live, you realize they are actually more alike then they are different.
• As @forexbrokr likes to say: The Best of Probabilities to You.*

@shortsegments

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