Profit logic of DFI project 2021-04-26

Today, I will share with you the views and questions of several readers in yesterday's post .

Some readers wrote , Invest a sum of unused spare money , In order to have a more calm state of mind , To support the fixed investment , To deal with profits and losses calmly , This is the fundamental premise of the whole operation .

I very much agree with this view . I remember several times I said to some readers about whether to invest in digital currency ： If you are in debt 、 The economy is not well-off or the money invested in the short term may be in urgent need at any time , No matter how good the investment object is, don't invest . Because in this case, investment , Mentality will be extremely anxious , Once you lose money , Will put yourself into a worse environment . This risk is too great .

We invest , The first thing to see is not how much profit you can make , It depends on how much risk you can bear . So as ordinary investors, we usually have to earn more legal currency , Save more money , Invest with spare money .

Some readers mentioned that fixed investment may also lose money . That's for sure . We risk losing money in any investment , So the key is , We need to find a way that we can accept 、 Operate at tolerable risks .

For fixed investment , There's a big premise ： That is, I must believe that the price in the future is higher than today , Without this premise , All our strategies are useless .

So how to judge that the price of an investment target must be higher in the future than today ？ In fact, we can't predict the future , So judging this is an extremely risky thing in itself , But there are still some factors in this risky thing that we can use to minimize the risk .

For digital currency investment , The factor we can use to reduce risk is to seize the two largest value currencies ： Bitcoin and Ethereum . Because these two are the foundation of the current digital currency system , If we believe in the future of digital money , Then we can't ignore these two coins . Even for some more conservative investors , He will only catch bitcoin , It's not too bad . All in all , Our key is to find the target with the lowest risk in the field with high risk .

Finding the target with the least risk is only the first step , I have repeatedly stressed , To make a profit on investment, we should not only have a good target, but also have a good price . Why do I write in my articles recently that I haven't bought any money recently ？ Because their price is not low in my opinion . And good prices are most likely to occur in bear markets , So this is why I have repeatedly advocated starting fixed investment in the bear market .

And readers are right DeFi Raised some questions , There are two main points ：

The first is why someone will use so many mortgages , Only lend a very low proportion of loans . What's the use of this ？

The second is DeFi Where does the money come from ？

On the first point , There may be such a need ： I have some ETH, But I need some money to do other things , But I don't want to sell what I own ETH, What to do at this time ？ I can put ETH Mortgage into MakerDAO, Lend money and do something else .

This scenario sounds logical , But in practice , How many applications exist , How many groups will try it ？ This is difficult for us to judge . At this time, I will use a method of thinking I mentioned in the article before ： Treat new things , We should pay more attention to logic , Look less at the scene .

What's the meaning of this? ？ That is to say, as long as it is logically established , Let's go and have a try , Don't think too much about the business scenario for the time being . because DeFi It's a new thing , Its scene is likely to look unimpressive at the moment , It is possible to highlight value in the future .

At that time, I tried to use 10 individual ETH Mortgage into MakerDAO, And then lent out nearly 5 individual ETH Of DAI, Then use this DAI Buy again 5 individual ETH. To some extent, it is equivalent to trying a leveraged transaction , Remember when ETH The price is less than 350 dollar .

This mortgage 10 individual ETH And bought with a loan ETH I've been getting today , Not sold . I didn't expect it to be a windfall .

On the second point ,DeFi Why is it profitable ？ I think it's the capital effect on the whole ---- Outside capital is pouring into this field , People's expectations are pushing up the price of various tokens , So everyone looks “ Are making profits ”. Why does capital flow into ？ Because capital sees that this model is logically established , Therefore, the mobilization investment 、 At the same time, observe the experiment , Once this experiment finds the real business scenario 、 Produce value , The return on capital will be quite generous .

In fact, this is the logic of all investment markets . In the traditional market , About electric cars , Autopilot 、 Early investment in these emerging fields such as artificial intelligence , Is so . We will see every emerging field in its infancy , Its mode is not mature , Even at a loss , Capital will hold , This is also the root cause .