It’s just not available to ordinary investors in ordinary markets: it shows you how many people are actually using a blockchain, not just hyping it. This kind of data is the blockchain investor’s secret weapon. Check out for instance this growth in DeFi protocol Compound: That’s a pretty strong signal to buy COMP. (Again, here’s the chart.) Because blockchains have network effects, rapidly growing blockchains can have quadratic growth curves. In blockchain (where user growth is everything), you can see this data real-time. But you don’t know how many people are using Facebook until they release their quarterly reports, by which time the data is old. Let’s say you hold FB stock: you know the number of people using Facebook is an incredibly important factor in the value of your investment. This is a huge difference from investing in public companies. Blockchain is TransparentĭeFi is built on public blockchains, which means you can see everything happening, in real time. And it starts with something I heard from an insider at Binance. Today I want to add a little more nuance to this approach, to help you find good long-term DeFi buys. In my mind, it’s like buying GOOG stock in 2004.
They have agreed this is a good approach for long-term investors in this space. I’ve tested this approach with some of the smartest investors and traders in DeFi, inviting them to poke holes in it (I invite you to poke holes in it, too). Swap your ETH for a new token ( instructions here).Buy Ethereum (using a service like Coinbase).Once you’ve identified a good DeFi investment, here’s the 3-step method to invest in these tokens: As always, do additional research, and don’t invest more than you’re ready to lose.Any projects that are rapidly growing (but token price is not) are likely good buys.To quickly validate which tokens might be a good buy, look at user growth ( chart here).The tokens can be considered like “stock” in these “companies” (e.g., buying UNI is like buying “stock” in the Uniswap “company”).Instead of putting your money into all these DeFi platforms, just buy the tokens instead (e.g., instead of locking up value in Compound, just buy and hold COMP).
#Best defi coins to invest 2021 how to#
This is a followup to our top-rated How to Invest in DeFi article.
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