While this rapid progress was on my thought process to invest in the space, it has outpaced my expectations to a level that I could not even keep up with it! I identified Decentralized Finance (DeFi) as a needle mover for the asset class but the valuable resource of time was not on my side to do the sufficient research to take advantage of these opportunities. The bad news was missing the boat on the likes of yield farming and new tokens that have created billions in value in less than three years. However, it has brought the great news of alternatives for my portfolio over the long term which is my vision.
Luckily, I did continue to accumulate assets in the Ethereum world which helped my second step (first was my DAI Oasis research) into the DeFi space an easier task. I have now tested a bit on the Liquidity Pool concept and have to admit that I am impressed. Despite the reduced returns being seen given the growth in platforms and competition, the yields are still so much greater than almost anywhere in traditional finance. In fact, it has even brought down the amount I have been targeting for a retirement like fund which was high considering the 4% rule often put on it. The early tests on those I have encountered are showing returns in the teens, net of impermanent loss risks.
While I still have lots to learn, my approach of understanding and piloting tests before jumping in has worked out. I continue to practice good investment practices like diversification and scaling into positions which should help over time. However, it seems that there is no going back now given the amount of assets staked across the DeFi platforms. This will only improve on technology and experiences which will drive growth, adoption and ultimately, more value!
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