Posted on Nov 24, 2021Read on

Finding The Next Play - Spillovers

Since the start of this market cycle, none of my Defi “blue chips” pumped, this has stirred a pot full of question marks.

This is an article about something I’ve learnt from the “stirring”.

Lessons learnt:

  1. Cyclicality of the market (in relation to your own bag) is often specified by [your own bag] / native asset. This way of measurement/comparison is still, IMO, one of the best way to know whether you’re holding the wrong bag for this cycle.
  2. Anything that improves current market structure (Defi/NFTs) will always be where money will flow to. Olympus and Tokemak requires the negativity of liquidity mining and increases protocol treasury as a whole - this gives project excess capacity to innovate further
  3. Availability of leverage in the ecosystem (DEFI) have increase, this makes project token that are being easily leverage to have higher volatility (rhetorical) which in turn makes exiting slightly trickier.
  4. Exit strategy for projects are highly dependent on FDV market cap while on the other hand, current market cap is often use to market as “low cap”
  5. NFTS were existing product that didn’t clicked with most (previously) - people who own a punks weren’t punks shiller previously. A collective movement was established through wallet tracking, institutional shillers and also, Axie Infinity.
  6. The narrative of MetaVerse have been signalled through money pouring into NFTS and Facebook’s news. This narrative reflects one of the many spillover and also desire of higher efficiency (more than one use-case for NFTs)
  7. IDOs and Airdrops are the highest EV play one can participate in - It requires very little money and has the highest payout. Risk is minimal - lose your capital or a small amount due to participation in protocols
  8. To point 7, higher amount of forks, lower the return of each IDO participation.

Finding the next play:

Before finding the next play, liquidate majority of my holdings to L1s native asset or 70% into stables. This neutralise my relationship with my bags. Then find protocols that is increasing efficiency / productivity of current market structure, most importantly it needs a religious community.

More alpha are leaked in discord groups than twitter.

What if I miss finding the next play?

Try to find the next fork of that project and participate in it to attain Whitelist possibility.