Jasmine helps to understand some of the main DeFI concepts and frameworks along with exploring some of the protocols so you too can get started on your DeFI journey. Recorded on June 15, 2022 for Crypto Packaged Goods Genius Call series.
Jasmine is a product manager at META by day and a moderate DeFi degen by night! She fell into the crypto rabbithole and since then has gained a store of knowledge on DeFI chains and protocols. She has been sharing her DeFi journey via Twitter, with a focus on beginner DeFI content.
Connect with Jasmine on Twitter https://twitter.com/jasminexu888
Follow Club CPG at https://twitter.com/CPGCLUB
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Chris Cantino (CC)
Alright, everybody, welcome to Genius call number four with Jazz. This is D Five for beginners. Jasmine works at Meta by day, but is a Genesis member by night and probably sometime during the day. But she's a resident D Five expert, a great trader, and I've learned so much from you over the last several months, so I'm excited for you to kind of onboard our pop community into DeFi. Let's go.
Jasmine Xu (JX)
Yeah, thank you for having me. Okay, cool. So just going to walk you guys through the high level agenda and goals for today. So this deck is there's a lot I think there's probably like two major categories of today's deck. The first one is sort of like if you're a total beginner, you've never heard about DeFi or you're really learning about it for the first time. There's just a high level overview for what D Five is. A couple of really easy examples where if you don't want to think too hard about it, like, this is how you get started with DFI. The second part of the deck I personally think is a lot more interesting if you kind of like, enjoy the fire or like, oh, this is kind of fun, I'd want to go look into it more. I think that part is almost like the equivalent of teaching you how to fish far, right? Like if the first part is just telling you, here's how you go, do XYZ things, I think personally the second part is more interesting because now let me give you some frameworks for how you can take it to the next level. And so the second part gets a little bit denser, but this is recorded. I'll share out the deck afterwards. And so folks want to look at it afterwards or ask questions, feel free to go do that. So at a really high level, basically what I'll be walking through today is just like, what is DFI? And a couple of examples, a framework for how you onboard into Defy if you're looking at different chains. And then a couple of examples of how one might get started with, like, I call them lower maintenance strategies versus higher maintenance strategies. And my goal for you guys at the end of the day, kind of like I just said earlier, is one is just giving folks this high level under CMD Five, if you've heard about the term, but you don't know what it is. And the second one is giving you that framework for your own adventure. Right? Because I think at the end of the day, this type of stuff is a lot more rewarding if you learn the methodology to yourself. And if someone just tells you, put your money in a protocol because there's so much more you want to be on that. So to kick it off, I'm just going to go through just really high level, what is DFI and a couple of examples of it. So Defy as you probably know stands for Decentralized Finance. And it basically refers to this ecosystem of financial institutions like lending, borrowing and trading, that is built with blockchain technology entirely decentralized. So as you guys are probably familiar with Trackfire or traditional finance, that is basically the fact that that's the banking system that we use today. We give our money to the bank, the bank does a bunch of stuff with our money and sometimes you get a little bit of use back. What is really interesting with DFI and what blockchain technology has kind of enabled is the fact that you don't need that centralized entity to kind of do all of that stuff for you. You can theoretically trust smart contract code and obviously it's not perfect all the time and the smart contracts have different rules written in for what will happen to your money. At the end of the day. The reason it's been very attractive for a lot of folks is because either you can think about it as like you can get better deals relative to what you get in traditional finance, or if you already have crypto exposure and you just want to kind of gain extra quick benefit on top of that. That's how I kind of think about it. So the entire DeFi stack is like very complex. This is just like a brief screenshot of what the Ethereum D Five map looks like. And what you can kind of imagine is the different parts of DFI are building out these different primitives in the financial ecosystem, right? So there's trading, so the ability to swap tokens back and forth. There's the ability to have stable coins, which is where you can kind of park your money from some volatility. There are Oracles which tell you what the price is for different coins, et cetera, et cetera. And basically every single part of that traditional finance ecosystem is in that process of being rebuilt into the kind of DeFi ecosystem. So at the end of the day, the reason I'm really excited about DeFi and why I think it is at least worth learning despite the market conditions right now, I'll probably acknowledge a little bit of that as we go. One is if you already have crypto exposure, then I think it is super useful to sometimes just gain additional yield, right? So there are easy things you can do. Or let's say you're already holding Ethereum. You can stake it somewhere and earn 5%. It's not going to make you super rich or anything, but if you're already getting exposure there, it's kind of nice extra interest. And the other one that you just think is interesting and amazing from a real world utility crypto standpoint. It's just that you can send money internationally instantaneously with super low fees. If anyone has ever had to transfer money internationally, it's a huge pain. You can also borrow money without KYC. There have been a lot of these crazy stories of folks who've been able to get loans despite the fact that they were historically working and maybe unable to get those loans. So just to give you guys a couple of examples, this is the one I was saying about spending money. This was like the thing they used for the luna that once upon a time you can see that someone sent a million dollars for literally about $3 in fees which is something that wouldn't happen in traditional finance. Stable points are really important parts of the ecosystem and if you are doing a lot of deficit you'll have to learn how to trade and swap into stablecoins and you can really think about them as like a way to park your money away from the volatility of crypto. Now we are in a really interesting state and I think defined crypto right now. I don't know, every kind of stable point has its own issues and so generally the way I think about it is like diversify across a bunch of them. So you never kind of put all your eggs in one basket. This is also kind of the point I was alluding to earlier, which is like borrowing markets are really amazing. So the fact that you can go out there with your crypto if you don't want to go sell your crypto but you want to go access some of that liquidity, then you can go out there and take a loan out and people are able to do this way more efficiently than relative to traditional finance. And then this one is the thing I was talking about earlier around like easy yield to the concept of staging, right? So usually what that means is you are putting your money into the G Five ecosystem and letting your tokens help validate transactions on the network. You will go into some of the cons. It's not perfect right now, but these are certain different types of yields for very common layer. One tokens and then the other thing. I'm not going to go into a lot of details here because I think liquidity pooling is like its own kind of beast. But I highlighted here because I think it's one of the five really interesting zero to one innovation. And basically what this means is like when you are buying tokens off of coinbase or something, the centralized finance exchange, they run an order book for how trades occur. DFI is amazing because it is literally like people like you and me putting our tokens into this pool and we are incentivized to do so because there's some type of reward or percentage fee of trades that we get and that is how a lot of these defy liquidity pools and that's where the term is from generate yield and allow for you to basically swap tokens. The reason liquidity is kind of the most important thing and why a lot of these different D Five protocols are like basically paying you to park their money there is because they want to limit the kind of slippage when you're swapping coins. And what that means is, like in this particular example, min and USCC are technically both stable points. But obviously I pulled it on like two different places. You can kind of see there's a slight difference in the rate that you will get for the trade. And so a lot of the magic of things like curve or the magic of D five is that ability to limit that slippage and try to get you as close to the one to one as possible. I see that. I think Brian is going to do something deeper on liquidity pooling. I think I want to flag it here because I think it's a really interesting kind of valuable use case. And when you think about yield, it is actually one of the better ones. But the reason I'm going to opt out of it for this particular conversation is because I would classify it as more in the medium and advanced bucket where if you want to be lazy about your default strategies, then you shouldn't do this because it is a little bit more higher maintenance. But I think it's something worth at least being aware about. So the second part of kind of this what is D Five? This is what I mean by easy mode DeFi strategy is I'm going to give you guys two examples that I think I feel like I don't want to use the word safer because the ecosystem, like a crypto ecosystem on a really macro basis is fluctuating so significantly. I don't think anything is safe. But I think this is a good time for everyone to study deeply, understand these principles. You can try these things out on cheaper chain and get comfortable. And when the market is in a healthier, better state, that's when it might be better to deploy your capital if you want to be more conservative. But historically, one of the really common D find things that a lot of people recommend is sticking beef. We all like beef. We all want to go stack it. And one of the most popular ones is this one called Lido Finance. So what you can see here is basically, I'm going to assume everyone here knows how to set up a wallet and put Ethan to their wallet because all of you guys have a pop token. But basically you can take the Ethan your wallet and go stick it in there. And I think it always feels really scary when you do it for the first time because you don't know what's going to happen with these buttons. But it's not like super difficult. When you go to Leo Finance, you could say you click the submit button to do it and then you'll see a transaction that you have to go through it. Theoretically, when you do that, you're going to get the equivalent one to one ratio of state feed. The rationale for that is like when the merge occurs or whenever the merge occurs, you will be able to redeem your state for whatever that new amount is. However, this is where there's a little bit of a caveat. If folks are following Gifi right now, one of the things that you've probably seen is that the state east to eat peg is not one to one. Now, should it have ever been one to one? I don't know. It's a little bit debatable because basically what it's saying is like, you can stake, but then you can also pull out your liquidity. And so that's partially why the ratio doesn't necessarily have to be one to one. But the reason I called this out is because, for example, if you wanted to stay in Lido right now, staking directly on Lito Finance might not actually be the most efficient way to kind of get the most st thing for your buck because you can go on to Curb or something like that and actually swap it for more. I would say in general, if you're long term bullish on youth, this could be a good time to do that. Personally, I'm not really deploying anything because I think there's a lot of stuff going on in the market where it's really hard to know exactly what's going on. So I would rather just wait it out. But I think because I'm sharing this deck later, I've linked a couple of resources. So if folks want to dig into that more or chat more about it, that option is there. The other thing, the other example that I'm using here is called Stargate Finance. So Stargate Finance is one of these bridge protocols that basically lets you move your tokens from one chain to another chain, right? So if you believe that in the world we're going to live in a multi chain world, it means that you're going to want to move your tokens from one chain to another chain when that happens. I had alluded to this term slippage and wanting to get like a one to one ratio as frequently as possible. So targeted is really kind of neat protocol where you are able to basically swap your stable points from one token to another token. What is also kind of neat about why you would do this is if you basically put in USDC right now, you can see that I think the range is like three to 8% API. And so again, if you're just holding cash right now, there's a way to park your cash somewhere and just get a little bit of yield on top of that. In this particular case, they pay out in the Stargate token. Some hardcore D Five farmers will kind of in terms of farming, kind of comes from like you'll get these tokens and some people will choose to sell it off immediately for cash to derisk volatility. Some people will choose to hold it if they believe in kind of the protocol. My general stance on this, and I'll cover it at the end with best practices, is you'll see high yields sort of everywhere and you shouldn't chase it because at the end of the day, like, a useless protocol is still useless protocol, even if it's like API, like a useless token is still useless. And so I would personally do this stuff for protocols you already believe in. Don't do it because you see 500%, because a lot of those numbers also don't always hold. And so it can be very risky to go through the effort of moving to a bridge, moving things into the right currency. You want to be a little bit thoughtful and you want how you approach it. And I'll go into that a little bit more later as well. And for folks who want to tactically know how to get started with Target and sort of listing out the steps and examples for you, what's also neat about this one is if you can figure out how to bridge your money to an alternative leader one, I find that it's a really good, easy mode kind of D Five practice thing where I remember when I was learning about D Five, I didn't know any better. Someone was like, try putting $10 into something and see what happens. And so I put $10 and not really realizing it took $50 to get my money in and out, and it was totally not worth it. And so I often advocate picking your L One chain of choice, whether that's like phantom avalanche, aurora or whatever it is, and kind of practice these different mechanisms because the concept of adding your money into a pool, staking those tokens to get yield are concepts that are basically being translated and copied across every chain. And you don't need to spend like $50 per transaction to learn how to go do that. So specifically, on the start gate side, in this example, you can add USDC. When you add in, in this case, $10 of USDC, you get 9.9 LP tokens, and then you go to the farm afterwards, you take those tokens. I think for this pool I chose, it was 5% AP wide for a little bit of extra yield. So just to recap all of this stuff in kind of a part one, d Five basically creates these entire financial ecosystems in the absence of a trusted party because blockchain technology keeps this immutable record of transactions. The interesting kind of use cases that I get really excited about is crossborder payments with limited fees and also no timeline, the ability to kind of borrow outside of the confines of the traditional system where you have to fill out a bunch of paperwork, and also the ability to kind of just earn this extra yield on liquidity that you may already have exposed to crypto. Because why not? If you're going to hold this you might as well put your capital to work. So I'm going to now transition over to the second part. And I think this one might get this is where I think I sort of ramp up a little bit quickly. And so if something doesn't track here, feel free to ask questions and Chris can kind of bubble it up if there's a lot of them. So this part I think is personally a lot more interesting because I feel like what we just walked through was sort of like what is diffi and really high level basic things that you can do with it, right? So the interesting thing about DeFi is like, if you can figure out the right framework for thinking about the space, it's not very hard, honestly, to like ramp up on any chain, right? Basically the same D Five primitives are being built out of every single chain. And so it's up to the D Five explorer to basically figure out what chain they want to use and if they have conviction that chain, consider putting their liquidity on that chain and earning that extra deal. So what I've kind of proposed here is a really simple framework because I would say this is not the hardcore version. I don't mess around too much with leverage, but there are folks who are really good with all that stuff. But the way that I kind of break it down is like there's a couple of these primitives that are just going to be everywhere that you'll have to probably interact with, right? So stable tokens like this might be how you move in and out of the chains, or it might be how you move in and out of volatility on different ecosystems. Exchanges are obviously super important because if you're farming, you may want to sell off the reward token or you may need to swap tokens around to get into a farm that you want. Staking, which we just talked about a way to help validate transactions and network. I often like it as a way to use the terminology single sided staking. And basically what that means is you can put your token into a pool and earn yield on it, as opposed to liquidity pooling where you're putting two tokens in and you can potentially suffer from impermanent loss, which basically means that you would have made more money holding the tokens than farming it for defies, kind of the fundamental risk for that. Borrowing networks are also really important. They're a place for you to deposit collateral to borrow money. The reason I bring this up is one thing that I kind of learned from a lot of folks in the space is that it's borrowing that kind of really starts getting the TV or total value locked flywheel going in D file. Because as you can imagine, people start getting pretty nutty with the amount of capital that they go in. And so oftentimes that can be a signal for how quickly or not the ecosystem will grow, yield formings. We just talk about the liquidity pooling. I mentioned it here because I think it's important for your framework, but we're not going to go too into details here. And then I leave insurance there because I think technically insurance is good for protection against hacks. It's not really there on a lot of the other smaller ecosystems. And I would even argue questionable, like how good they actually are about paying you out of something goes wrong, but worth kind of thinking about. And basically what I typically do is I just gave you a sample here of how I mapped it even in my own default. These were notes I took for myself. Right. I remember I heard about Aurora. I thought it sounded really interesting, so I was like, all right, let me take this framework. I'm going to go do some research and I will walk you guys through the example with Aurora so you can see how this kind of works in action. And then once you kind of understand the overview of the ecosystem, you can make the call on whether or not you want to go farm it. So basically the way that the steps that I kind of think about when you're making the decision on whether or not you want to go d find a particular chain is the first step is you just map out the players and understand where they are in the ecosystem, right? So that's basically like you take the grid that I just showed you guys and then you fill out all the different things and just make sure you know what the ecosystem looks like. Then the second step is just like start playing with a couple of protocols to understand how things work. And the reason I flag this out is because oftentimes feel terrible, but not all of these protocols are reliable. I have gotten into situations where I put money in and I just couldn't get it out. Not because I think they were actually trying to rub me. I think it was just like, these things are new, they're janky, they're not always battle tested. And so I always recommend trying with small amounts of money just to make sure withdrawals, deposits, all that stuff actually works. And of course definitely test on cheaper chains. Don't waste money on east, just pick any chain that you like and you can do all these things for significantly less money. Then the third step is basically if you know the ecosystem, you're kind of confident that stuff works. Building out, think about it as your information flywheel for how you're going to keep up with the ecosystem. Right. The reason this second half of the framework of this presentation is kind of more about the medium to I didn't feel like it's quite advanced, but it's definitely higher time maintenance than the previous one is. Because if you are going to form on these higher reward chains. You do have to pay attention to some of the information narratives, how to check token prices, and so there are some tips I have for that. And then finally you have to make a personal call and like, if this makes sense for your portfolio and risk tolerance for actually farming or not. So no worries. If it doesn't quite make sense. I'm going to walk through every step of examples of how you would do this if you were starting from scratch. Today, I used Aurora as the chain because I think this was the chain that I personally use. I remember when I was building out this framework and thinking about how we're the space. So the first step as an invention was to basically map out the ecosystem. And to do that, I really like DeFi Lama. Defy Llama is an awesome resource where they do a really good job compiling all of the different D five chains out there, showing you where they are in terms of total value loss. That's the amount of money in the actual protocol. And you can also filter it very efficiently by different chains. So in this particular example, I went to the Aurora chain and then I looked at all the TV stuff and I took a screenshot of basically the top ten protocols that I see there. The reason I only did top ten here is just because, I don't know, there's like a hundred of them or something like that. But you'll see really quickly in TV, like, really significant drop off. And I don't know, you're probably not going to trust your money with the 100 chain on that list, but you might trust it with something in the top ten. So I was like, all right, cool. These are the ones that I feel the most comfortable with in this highly received system. Then the second thing, I guess on the first thing I told you, you look at it on Defy Llama, then you can take all those different protocols, start exploring and looking into them, and then you can knock them into this ecosystem. So in this particular case, I found out that stablecoins that are used in Aurora are USBC, USDT, and USN. The primary exchanges are Trifleis, Synapse, Rose, and you kind of want to swap. So just to kind of make sure I bridge how I got there, basically, I clicked on every single one of them and went through them and made sure that I understood what it was, and then I mapped against that. So, like, the two borrowing ones on there were bastion and origami and yield farming in this case were Vaporwave and Bluebird and basically the yield farming. What this means in this case is like, when you put money in certain exchanges to earn tokens, you theoretically have to go in and claim the tokens every day. There are solutions. In this case, I call them deal farming solutions that will effectively automate that process for you. So they will automatically claim the tokens and sell it, and so you earn money faster. There are cons to them, but this is kind of what the ecosystem looks like. And I think you can also kind of derive some sorts of insights when you look at the slide and the previous one. So the ones that I personally looked at was, I was like, okay, so there are a bunch of exchanges on this ecosystem, but if you look at this carefully, tricolaris is, like, way bigger than all of them. So Tricolaris has 54 million in TV. Synapse is on there, but it's not exactly like an Aurora native exchange. But let's see, there's, like, Rose near Penguin, a spot. They're so much smaller. If you're thinking about like, I like this ecosystem, I want to go farm somewhere, my guess would be Tri solaris is probably safer than some of the other ones, just based off of how much TV that they have. This one's also kind of interesting. Synapse is technically a bridge, but it's also pretty high on this list. I didn't expect to see that, and I was like, Okay, cool. I didn't realize I've gotten quite so large. And then the other one that was kind of interesting was I really like single side staking because I try to not suffer from impermanent loss, but I couldn't find anything super obvious for Aurora. In this particular case. I think Aurora you can stick on the near chain, which is like a totally separate it's kind of a separate chain. I was like, Okay, cool. That's interesting. Then the second step that I talked about is you start playing with the protocol, and basically the functional things that you want to go test are how to get money in and out. So that is, I think, on the bridging side. So can you actually get money without major slippage issues? Basically what that means is, for example, if you want to put in $100 into another chain, you don't want to only get, like, $50 out. That's really unfortunate. And so you want to just kind of test and make sure that all of that stuff worked out well. The other thing I always look out for, for D fight that I sort of forgot about when I first started was what's the actual needed gas token. So this happens to people a lot. They're like, Okay, cool, I want to go farm by east somewhere, so they move their east over, but maybe eat isn't the actual token for gas in that particular chain. So I'd always recommend moving over the gas token first, because otherwise you just can't do anything on that other chain. And then the second thing I would test for playing with the protocol is, what do you actually do with your money, right, to figure out which protocols look interesting, and then you can test some small deposits and withdrawals to make sure that everything is actually working. So in this particular example, I took a screenshot of two of the big kind of exchanges here. Okay, that's interesting. Okay, well, basically this is like the last one is yield from Treslers, and the right one is yield from Rose. In this particular case, I was basically looking at what the APRs were and whether or not I was interested in it. I deposited some money to play around with everything and make sure it worked. Specifically, things you want to test. For example, this is a USBC racked near Pool on Triplers. You would put in a test amount. Like you can put in $2 or something like that just to make sure that everything works and these are functioning. The types of things you would look at, one heuristic that someone has given me before is if you want to be more conservative, even when you're doing a little bit more of this, like a higher risk farming is that you potentially look at pools that have at least 5 million in TV. That was what one person used. You can figure out what your personal thresholds are for the type of risk that you're comfortable with. So after you test something and assume everything is working as intended, then I kind of think about it as like, what is that information workflow that you want to go bill to figure out whether or not this actually makes sense for you? Right, so there are certain tools here where there's a tool called Dex Screener. So I think a lot of us are probably familiar with like, Coin Gecko or Coin Market Cap. But the thing is, when you are doing a lot of deepy stuff, these tools tend to be like these tokens tend to be so new that they don't get listed on those exchanges yet. And so I remember when I first started farming on Aurora, I was like, oh my gosh, I can't find anything. This is super annoying. The other thing I didn't realize was, like, liquidity on some of these new chains is actually very low. So I remember at the time I really wanted to find a specific token. I just couldn't figure out how to match the token correctly. And so I do a little bit of sleuthing on Deck screener to figure out how I could actually get into the position. Then the second step here is just like, let's say you look into the protocols. You feel pretty good about them. Then you might want to start mapping out the total value locked in different pools and the potential APIs to figure out which protocols make sense for you. And then the other kind of tips here are creating a Twitter list. So what I'll also do is if I want to form a specific chain, I will just make a list and kind of start following different influencers. You won't exactly know who's right or wrong, but take it as a bunch of information that you have to go filter through. And the other pro tip I kind of have here is that it makes a lot of sense when you say that loud. But if you join the discord for a specific protocol, you have very good strategies on the protocol and on the chain. And it kind of makes sense, right? Like, if someone cares enough to go hang out and discord for tricolaris, then they're probably just going to be really big fans of Aurora. And so, yeah, they'll talk about triceratops, but they're also probably going to talk about Aurora chain stuff that's kind of I feel like a tip that I typically like using when I'm like, okay, I'm farming somewhere new. I kind of want more alpha because my friends aren't talking about it. Where can I get more information? And then assuming you've done all of that, then I think the question is whether or not investing for you makes sense, right? And so, on a very high level, like, if you oversimplify and when I shared this deck, you guys will be able to click on all these links. I wrote this one out, I think as a mirror post awhile back. But basically, the way I think about it, there are strategic questions and then there are tactical questions on a strategic level, like what is the ecosystem protocol narrative? How is the team for the specific protocol that you actually want to go invest in? How's the product? And then what is the quality of the community? Is the team responding to feedback and all of that type of stuff. And then I also bring up tactical questions because I think one thing that I often think about is it's naive to believe that you should just go farm the thing today, right? There are legitimately better times to enter positions versus other times. And the one thing that I'm still trying to get better at is like, even if I decide that something is the right protocol for me. For example, if you had started farming these protocols now versus like six months ago, you're probably getting better returns now. So we can't always predict the macro market conditions, but definitely be thoughtful about what that looks like. And then of course, think about what your expected time horizon for investment is, right? There's very much for people who are really into D fight. They will chase different narratives. You can kind of tell when crypto Twitter gets really hot in a particular ecosystem and you get really strong yields. But what happens after that doesn't mean that the protocol is bad. But maybe you have to stay there a little bit longer to know whether or not you are farming for something for a one week or one month period versus a six month period or something like that. And then the other kind of personal note that I would suggest to anyone that's thinking about this stuff is, one, everyone's tolerance for risk and reward is super different. And so I think that's where it's often, I think, very difficult to say like do X or wire. This is definitely the right strategy because at the end of the day, the way I think about it is you should do a strategy that you're comfortable with, right, if you are getting it. Sometimes I can feel myself getting into a state where I'm checking the thing every single day, every single minute, and I'm like, this is too much. Like, I don't want to spend like 90% of my time worrying about this particular positions. And that's a really good sign for me that I should probably derisk that. And that threshold is going to look very different for everyone. So be honest about that with yourself because I think that's actually quite critical. And then the other major step is basically like, do you want a lower high maintenance strategy? Right? Like the trade off, as you would expect, is like higher reward also comes from higher time spent. You have to stay on top of the narrative. You have to know what the discourse is like, and yeah, you will go earn a lot more. And then the lower maintenance strategy, as you can imagine, is like, basically maybe you put it in there, you check it once a month, it doesn't take more than five to ten minutes, but the trade off is you are going to earn a little bit less money, but maybe it's a little bit safer. So I was kind of thinking through those different considerations for your personal decision making, I lost content, but I'm going to recap everything here hopefully, so we can kind of make sure takeaways. So I think the first one is along with the best practices, I think of it as every mistake that I made in D five, hopefully you guys don't have to make. So first one is, as I just mentioned, figure out your own risk and reward appetite. If you get into a protocol and you feel panicked and upset about it every single day, then don't get into the protocol. Probably doesn't make sense for you. The second one is like, don't just chase high bill numbers. I used to get caught on this all the time. You'll see a new pool, some be like, oh my God, this just launched. It's like 200% APY on like a stable coin. You're like, Oh, this is fantastic. But the reason it's so high is because there's no money that's in the pool, right? And so by the time you make all those changes and you get your money in the pool, that 200% might actually just be like 5% and it might not be that interesting anymore. And so I often caution from like, you shouldn't just go move something because you see a big number unless you're a whale. If you're a whale, then go ahead. But I think for most retail investors, it's not actually super practical. The third one is that you should perform protocols that you really believe in, right? Again, don't chase you. If you get a token that is worth nothing and you also potentially get hacked or the protocol gets hacked, then no amount of 500% API is actually going to fix that problem, right? So really think about it as like your liquidity is precious. Like give it to teams that you believe in, protocols that you believe in. So that way if you are earning yield on their tokens, you're almost like DCA into protocols that you already like. The fourth one is this concept of just diversification, right? I think I remember actually back in the day when we thought UST was safe, it was very tempting to put all of your money in UST because you were like, this is so easy, why wouldn't I go do it? But we all know sort of what happened to Luna and UST. It imploded. And I think the point of diversification is when something like that happened, you should not feel like you lost everything. A personal rule I keep for myself is no more than 5% of my crypto portfolio. Anyone? Protocol, no matter how lucrative the yields are, just because you never know, right? Sometimes things happen because they're ponzi. Sometimes things happen just out of bad luck. There are plenty of well intentioned teams that they just get hacked or something and there's no need to kind of put your personal net worth at risk. There fifth one practice on a chain that's cheaper than E. Don't be like me. Don't put like $50, don't spend $50 trying to see what $10 does. Pick any of the chains where costs are almost in the pennies. And that's where I think that's your best playground for how you get started with EFI. The other thing is kind of just like remember the context of the macro, right? So this is kind of the point of life. I started farming some pools in December. I probably should just exited those farms and not bother farming up until now, right? So at the end of the day, no matter how good these deals are, they do move and sling it the same way the macro does. And so that context is important. And then the last one to think about is APY is not always super accurate. And so I'd be really careful about how we look at it because I think you see 200% and you're like, that's amazing. I'll double my money in a year. But the reality is that if you look at the APY numbers on a consistent basis for many protocols, they almost never hold. And so the metric that I personally look at for my own record keeping on this stuff is like apr because that's not compounded. And then I will divide it by 365 to figure out what the actual daily return is and I think that's usually a more accurate proxy for everything. And then I would be remiss if I did not warn everyone about this, which is DFI is super rewarding but also incredibly risky. There's like smart contract risk, protocols get hacked, bank runs happen and literally everything. You can go to this website. I think it's like rec news and read about every single D Five protocol or something bad happens. I think it's one of those things where like DeFi is like the wild west right now. I still think it's super worth looking, learning about. I spend a lot of time in it. But you just have to be really careful about how you manage your portfolio. And the way I personally do that is this diversification point. No more than 5% in anything even no matter how good the deals are. And then I will leave you guys with two kinds of gifts here. So one is a low maintenance, like E Five strategy and the second one is like some ideas for a higher maintenance strategy. So a super low maintenance strategy. We're talking about some 5% yields, which you could argue is not even worth it. Lido finances Stargate or Sinatra ones I really like do be careful. Obviously the market is changing so much. I think Lido is also interesting because I don't know, a few months ago I would have felt really confident suggesting it. But now with this whole st pegging, it's really hard to know exactly what the right entry point is. But maybe keep an eye on it if that stuff is interesting to you, if you want to get into that. And then if you want to do this medium like higher maintenance strategy example. So this means you're kind of optimizing for yield. You're willing to move capital around. You're also willing to spend an hour or two just to keep up with this stuff. A couple of pools that I've been in for several months, which is why I feel safer about them. I really like GMX on arbitrary and avalanche. Basically it's not exactly stable point farming, but their token GLP certainly fluctuates a significantly lower magnitude relative to the overall market. But it's consistently paid out around like ten to 30% API for several months. The other one is of course if you really like a layer one chain, you really like their major decks. Decentralized exchange. You can consider LP pooling. LP pooling typically with two pairs can get you between 10% to 90% API. It's a lot more complicated, but it's probably the faster way to earn money on your liquidity. The other one that could be interesting is like productless finance and vector finance. On avalanche. They're very similar to carbon convex. For stablecoins. It basically means that you can a put stable coins in and park it somewhere and get like pretty decent deal. But if you are going to go do the median to higher time maintenance strategy. The thing that I would also suggest is you invest in this defy skill tree, right, which is basically make sure you understand how to take the basic actions for participating in D Five. So things like swapping tokens, bridging it to another place, learn about what impermanent losses, learn about liquidity pooling, borrowing, whatever it is that you're interested in, learning those literal tactical actions. Then I think the second part is just getting smart about the ecosystem, learning about what's happening. You can do that via Twitter list, you can do that via Discord telegram, chat, et cetera. Information is incredibly important for you to kind of make an educated decision to invest time in that. And the last step then is like, pick the L One chain you like and go through that framework so you can map out what is interesting or not to you. Yeah, that's it. I will send this link out. Now that I'm done talking. I've also linked a couple of interesting links here. So one is this thing called Bridgeours. It's basically like the best way to bridge between two chains. Multi chain D Five deals is going to be a link to Defy llama where they show you the deals for a bunch of different changes. It's kind of nice. The Daily Eight is this kind of thing that Darren Loud puts together. It has all the defy news, daily summarize, and it's free, which I really love as a way to quickly keep up in the ecosystem if you don't have time to do it yourself. And then True Sources of Defied Yield is a really great article by a coin based engineer who kind of talks to you like, I didn't have time to get into it for this session, but where the yield is coming from is really important. Right. We know that there are ponzies and then there are actual protocols that are paying back the revenue to their users. And so it doesn't mean that every Ponzi is bad necessarily. But I think one should know where their money is actually coming from, right? The adage is like, if you don't know what the yield is, then you are the yield. So that is all I had. Happy to answer any questions.
CC
This is great. Yes, thank you. I personally want to do like four or five. You can hear the echo because if you don't have for a second yeah, I want to do like several of these because this is really valuable and I've been trying to post a bunch of the links in the chat so people understand where to follow and with the bookmark. But I'm so glad that we're going to be able to get this deck. So with the recording, I'll share a deck, and with that, I think we should just start taking some questions from people. If anybody wants to raise their hand, whether you want to talk more about the frameworks or just where to start or specific protocol or anything you heard tonight we can jam on. I had a questionÂ
Guest
if I can jump in. Okay. Thank you, Jasmine, for the presentation. It was really interesting. I've never been into the file. I've never really trusted all those yields and interests and all that stuff. But would you say that it would be a good memory right now, for example, by Eat at such a low price and start, like, staking it into somewhat something of a safe, stable, low yield return investment pool?