If DeFi Bubbleception is true, what's the strategy as an investor and a founder?
If we are indeed living in a sequence of bubbles (DeFi) within a bubble (Bitcoin/Crypto) how should we proceed?
Until you realize that DeFi will go through a series of manias and crashes within the multi-year crypto bubble, you’ll feel that you’ve “missed the boat”.
This could mean different things to different people. An investor wanted to invest more capital, earlier. A founder wanted to invest more time, earlier. Both wanted to be paying attention and directing their efforts to DeFi [in the past].
Realizing this will happen over and over is a blissful moment. You can focus on two tasks then:
identify which stage of the bubble you’re in
start to build for the next bubble
If you think you’ve completely missed the boat, it’s very likely that we are in the latest stages of the bubble. That’s the time to ask questions.
I think you should start with emotion and affinity. Among the new markets that DeFi brought into existence, which ones do you like the most?
From there, you should be hyper-realist. You can take the vitamin or the painkiller approach:
Vitamin: what product is missing in these markets? Can you identify and build them (as a founder) or buy/fund them (as an investor)?
Painkiller: what is a problem in these markets? Can you solve them (as a founder) or invest in people trying to solve them?
People generally think you should go for the painkiller, but if both are rationally justifiable, I prefer to go back to the first question and take an emotional approach to decide.
Badger DAO is a vitamin. It’s marketing and creating products for Bitcoin in DeFi. This could be done by others, but focused marketing was missing.
NFTX is a painkiller. To have exposure to NFTs you’d have to hold on to illiquid assets. This is can be painful if you ever need to sell fast. NFT Index Funds is a solution to that problem.
I identified the rational problem, but I was taken there (as a user) and by emotion/affinity.
This should be a recursive exercise. The unfolding of the bubble and the market should both give you more questions and answers.
But the main lesson is: don’t think you’ve missed the boat. This is a longer journey than the current mania suggests.