Defi – The industry is moving at the speed of light. Can you keep up?
If you are from traditional finance and look at what is going on in the DeFi space, it would be similar to watching a Formula 1 race, where Uniswap would be the leading driver of the decentralized exchange (DEXs) team. Uniswap came out of the closet in May, and exploded onto the scene in July like never before. It has been a catalyst for exponential growth in the entire DeFi market, just within these past couple of months, and now daily volume exceeds $300 million per day. Just a year ago, ‘’DeFi’’ was a word that you would hear only in the closed groups of true decentralized economy enthusiasts, but now it’s gaining a momentum that we saw in the initial ICO boom!
Previously, the focus was to raise funds in a private sale with Big VCs and HNWI, but now it seems the trend is to start with a private sale, and then move towards a token pre-sale to the public. Three months ago, projects turned to listing on Uniswap to gain access to the masses. This new paradigm shift now allows your average Joe, who has no connections to VCs or investment pools, to participate in the exponential gains from getting in early. If you compare the ICO era, the average raise would take 3-6 months (later 9-12 months). It cost founders up to $1 million just for marketing and advertising.
Now, for example, Unilayer, had a private sale announcement. 18 hours later, they were listed on Uniswap because the barrier of entry is very low, no marketing budget was required to launch, and most importantly, no waiting time. The fact that anyone can list also comes with some good and some bad. Because you don’t need a finished product, nor do you need to publish the team, this can invite some unsavory characters. Anonymous groups do some Uniswap projects, while more high profile projects like Mantra DAO or DIA are done by professional teams that are public.
Once you get a taste of speedy listings, you can’t imagine going back to the 3-month sale process and then paying centralized exchanges high premiums so that they can consider listing your token. If you have a bit of coding knowledge and social media marketing skills, you can get microfinancing and raise money to develop your own project. There are real cases where people learned solidity (Ethereum smart contract programming); after a few months, they’ve made their token, announced their project, and raised a couple of hundred of ETH. Now they’re successfully developing their project to further stages.
The industry is not only moving at the speed of light, but it fuels new, and some would say – enigmatic projects such as Popcorn (CORN). It is a meme social experiment based on Ethereum network that raised 230 ETH in just minutes ($100,000). When Crypto Kitties came out, nobody dreamed about the success that they had achieved, no matter how crazy the idea was. We will keep an eye on the development of Popcorn as well.
Presale is the Golden Goose
However, listing projects is not where investors harvest their primary yields. Presales are the only way to get into these projects early, and at the cheapest price available. It’s also good at not moving the price, as all purchases are made over-the-counter (OTC).
Just two months ago, projects wouldn’t do the presale but would list directly on Uniswap and keep a large percentage of coins for the team, then turn around and sell their coins to funds and other large ticket investors. They figured out this negatively affects the price and healthy token trading lifecycle, therefore that model slowly morphed into a private sale to public sale model.
There was a great example of a project named Unigraph – a 3rd layer solution that adds charts to Uniswap. This feature was missing and is going to improve the trading experience drastically. The project was launched at midnight UK time with zero marketing, nobody knew who the founder was, and it came out of nowhere. The founder-owned 80% of supply, which was a massive barrier for a further fundraise. The value of a token went up by 400% and stopped there. The reason being that the team share was too high, and that indicated an increased risk. What the founder did to mitigate the situation was that he locked the initial liquidity. While locking the liquidity offers zero benefits if the team owns 80 % of coins, they can exit and sell at any time. After a successful raise, he has more than enough funds – current developers locked a majority of the team share and left enough for short term development and marketing. Speed is everything here, and a quick reaction is key to success.
DeFi can be very profitable but it comes with its own risks.
One of the most important things in this space that will gain you a competitive edge is to have the right information. To reap the most benefits, you need to spend a substantial amount of time researching projects, scanning telegram groups such as Moon Hunters [ https://t.me/moonhunters ], and other social media portals like Reddit CryptoMoonShots and 4chan. There are groups of 3000+ members with over 150 DeFi researchers who are conducting due diligence on projects daily and have been in the blockchain space for many years. They’ve been through the scams, and have seen the ‘rugs’ (a DeFi community slang for: exit scam).
Nevertheless, just like in any uncharted territories, there is a lot of space for those who are contributing as well as those driven by greed. They come in disguising themselves under big ideas, use all the catchphrases, then they raise 100-1000 ETH and pull a Rug.
DeFi project Presale toolkit – arm yourself with patience, get a good feel of the project, join as many groups as possible, and digest information. That information can determine your future. Invest your time and wait for the harvest. It is a very linear relationship between time invested and money earned.
Quality information is what will make you the most gains in this rapidly changing market. If you want to get into DeFi, invest your time, and you will get rewarded. And as always, Do Your Own Research (DYOR) and wear your Big Boy pants, then there will be nobody else to blame.
DeFi Insiders MSH are a group of experts working in the heart of the movement. This is a live reflection of what is happening on a day to day basis. Nothing written in this article constitutes financial advice and does not reflect either the views of City AM or those of Crypto AM.