Investing in crypto in general and decentralized finance (DEFI) in particular, is not for the faint of heart. To be successful you must be able to hold onto your tokens during the huge price swings the crypto market experiences. Those swings are amplified in the emerging world of DEFI, where many new and untested projects lurk, plus you have to contend with unscrupulous developers and scammers looking to steal your funds.
Despite the minefields one must tread through, DEFI is the fastest growing area of the crypto market. Why are so many people putting their hard-earned dollars in such a volatile market, you may ask? Wouldn’t they be better off putting their money in the traditional capital markets — in things like stocks and bonds, or keep it in the good old bank or, if you don’t trust the gatekeepers who run these institutions, you could keep your money under your mattress. A thief certainly would not expect you to have it there. Why risk it in the crypto market?
Well, for one, the traditional capital markets have not benefited the masses tremendously. A few individuals at the top are the ones who have made killing from these markets. Ordinary people just do not have the skills and resources to compete against the elites with their inside knowledge and wealth, to benefit in any meaningful way from the markets.
People are now realizing the potential that cryptocurrencies hold, and the potential for something like DEFI to dramatically improve their financial circumstances. More importantly, the resources and knowledge needed to invest in DEFI is more easily available and accessible than that for traditional capital markets. If just a fraction of the many DEFI projects survive and strive, many ordinary people will achieve financial freedom, starting with a modest investment. When you examine some of these DEFI projects like DRIP, FURIO, Splassive and others, you can see the tremendous potential if the developers can figure out how to make them sustainable.
My belief is that most DEFI projects will not survive in the long run, but as pioneers they would have done the early work and give others a solid foundation on which to build and improve upon. The analogy I like to use is the development of the Internet. Many pioneering Internet companies like Netscape, MySpace and yahoo! are either not around anymore or have been surpassed by rivals that built better mousetraps. Unfortunately for some of the existing DEFI projects, this fate awaits them. It is too early to start picking winners, but just like how companies like Google, Amazon and Facebook survived from the many Internet startups, we know some of these DEFI projects will survive.
For those not in DEFI, now might be the time to give it a look. Most of the projects only require a small investment to get started, so one can tiptoe in to see how they work and if they appear feasible as a long-term investment, you can take a bigger step. With the “Great Resignation” underway as people become more frustrated with slaving for the man while earning peanuts, making passive income with minimal effort from DEFI projects could be a bridge from wage slave to financial independence.
There are many interesting DEFI projects, with new ones coming on stream daily. No one can predict the future, but it is a good bet some projects will figure out how to sustain themselves and be around for years. There is above normal risk investing in DEFI, but as they say, no guts, no glory. Now might be the time to look into adding DEFI into your investment portfolio. Who knows, this could be your path to financial freedom.
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This article is for information and educational purposes only, and nothing stated herein is to be construed as investment advice. Neither the author nor the publication takes any responsibility or liability for any investments, profits, or losses you may incur as a result of this information. Please do your own research and due diligence before making any investment decisions. The author has made every effort to ensure accuracy of the information in this article, but makes no representations or warranties, expressed or implied, to its accuracy, completeness, timeliness, or correctness. The author may own cryptocurrencies discussed in this article.