You will likely notice if you follow me that I do spend a decent amount of time thinking and writing about crypto. It’s a fascinating space with a ton of innovation and so many opportunities. Not only are there undervalued assets and good investment opportunities but the basic concept of airdrops and generally rewarding activity as well as its highly volatile nature makes it difficult to not keep it top of mind at all times.
My Main Portfolio Is Almost On “Automatic” Mode
Of course one main reason why I can spent a lot of time on my DeFi portfolio is because most of my traditional portfolio that includes my stocks and ETF’s requires very little time. I do keep my eyes open on any news and and on earnings for the stocks that I do hold but given there are only a few individual companies that I hold, that is something I can do with just a few minutes per week. One of the big benefits of etf’s is that when I get dividends or other inflows and have money to invest, I can simply add to those etf positions which takes a few minutes at most. It is also partially the nature of holding mainstream companies such as Apple (AAPL), Microsoft (MSFT) and Costco (COST). Their businesses are stable and its rare that new initiatives or news about the company will change my long term conviction.
My DeFi Portfolio Does Require Monitoring
My DeFi (crypto) portfolio however requires a lot more maintenance. Why? So many reasons. First off, it is an incredibly dynamic world where new tokens, platforms, chains can pop up without warning. Because of that, returns are also very volatile. This 10% return on a USDC stablecoin might have been caused by an opportunity that a few Degen traders were working on. That return might be 2-3% just a few days or weeks ago.
Then there are the unfortunate security concerns. Blockchains and defi apps are constantly changing and are targets of hackers and so many other schemes. That means the overall environment of crypto has a lot more risks and requires being extremely careful but also diversifying risk. One of the more famous examples is the collapse of the Terra Luna platform and the eventual $40bn fraud charge brought to founder Do Kwon.
Every day, I track news on platforms and tokens that I use mostly through following the right accounts on twitter. That requires a decent amount of work to avoid accounts that spam or promote nonsense. I generally follow the official accounts as well as a few trusted sources. It is absolutely possible to not monitor every day but it’s something I enjoy doing.
The other thing I try to do every week is go to the main platforms I use to check returns, collect and reinvest any rewards, etc. It takes just a few minutes but is something that needs to be done.
Activity Gets Rewarded On Crypto Platforms
One of the amazing features of DeFi is how it lets its users take part in the growth by sending users “airdrops” when they launch their own token. For example, a platform that has been live for a few months might launch a “token” similar to shares of a company (I could write a lot more about those tokens and probably will). One of the more recent ones was staking & MEV company Jito launching its token and giving users a very valuable airdrop. This is a fascinating part of crypto because it makes it possible for anyone to contribute and be rewarded for that contribution. Every platform will manage this allocation differently (tokenomics) but I’d say that this is something uniquely possible in crypto because platforms are able to go back and track activity and contributions.
Many users will try to get airdrops by investing and trading on such platforms but there are also countless cases of users being rewarded for general activity that required little to no capital. Imagine McDonalds being able to reward its early or more loyal users or Uber going back and rewarding its earliest drivers and passengers. This is an incredible feature of crypto.
Mindshare vs Asset Allocation
Even though I spend a lot more time on my DeFi portfolio and continue to think about my long term asset allocation, I will continue to hold more traditional assets because of the risk vs return profile. That will most likely change slowly over time but I want to be very deliberate about how this evolves over time.
