DE-FI Is A Hedge Against HODL'ing Opportunity Losses

4 days ago
3 Min Read
643 Words

Hey JessInvestors

If you've followed this blog in the past, you'll know I'm a big fan of HODL'ing even before Bitcoin came around I was HODL'ing cash and then deploying it into financial assets as I saw opportunities. HODL'ing as been a fruitful financial strategy for me, and I can't imagine where I would be without this mindset.

Not that I am wildly wealthy, but I do have no debt and a cash buffer and investments to my name. HODL'ing by nature can be done with any asset class, and it's not only a Bitcoin or crypto thing. It can be a good strategy with any asset class that benefits from currency debasement.

As a cash HODL'r in my formative years of financial literacy, I had to do it in a currency that has been abused by its government more so than others I am grossly aware of how a currency can lose its value in a short space of time.

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Savers are losers HODL'rs are winners

In any runaway inflation based economy like my local currency, the fisher effect regardless of the numbers they provide continues to eat into your purchasing power year after year. No matter what rate banks give you its always lower than the actual broad money inflation which eventually trickles down to you and you pay higher prices.

So savers are losing, however HODL'ing in an asset like Gold or Bitcoin you get the benefits of saving and instead of being paid interest you enjoy the benefits of inflation. Since inflation moves faster than interest rates, you're in a faster source of wealth accumulation.

HODL'ing is a long term capital accumulation game. Since your stake isn't put to work or increasing without you adding more capital, you only betting in inflation and increased demand for the asset to increase your purchasing power on paper.

Until you sell your Bitcoin/gold/asset, it is an unrealised gain.

DE-FI the odds

Like I said I love HOLD'ing I love being rewarded for my prudence and I think its an important lesson we all should learn. However, dead capital is not good for economic growth nor my goals. I can't just sit on crypto and hope some bigger fool will buy it for more money in the future.

DE-FI is trying to establish a yield curve for the crypto market, which is important for any asset class. You want to know what an average return looks like when using the asset, or collateralising the asset, not only price appreciation.

DE-FI allows you to put your stake to work, earn extra stake and turn capital into a productive use case. DE-FI also allows you to dollar cost average into your new position.

As you take profits from your loans backing, liquidity pools or staking you get to take that profits and dollar cost average in as these cheaper tokens (returns) add to your position and lower the capital expenditure you placed on the original value.

DE-FI allows you to reduce your risk to the downside as well as multiply your gains to the upside. I don't see DE-FI as any sort of getting rich quick scheme; I am not after super-high interest rate returns. What I'm interested in is accumulating a higher position in stake to reduce my average cost of accumulating.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

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