Farming
Finding the best harvests
Hello everyone, and apologies again for this post not being about Monad.
I know the past two weeks I’ve said I’ve been writing it, and I have. I’m just finding it quite hard to find all the right words that will truly do the project justice.
Plus, the fact that some of my internet friends might actually read it kinda makes me a bit scared! AAAAAAAAA!!!
So anyway, as it’s now 9 PM and I have no post to publish, and I am knackered after a long weekend of many real-life and internet things to think about, I will rush together something very quickly and pray that you all close two eyes and skip this one!
People often ask me in DMs and in group chats for advice on which projects to focus on, where to invest, etc. I usually tell everyone the same thing. I am an idiot, and you should not follow me.
Everyone's circumstances and skill sets are different. You may be a fantastic memecoin trader, capable of holding pepeinu6969donkey from $100 until $3.2 million. I would have panic-sold it when it went down from $100 to $80 and spent the rest of the time being miserable.
Many people trade with different sizes and different life circumstances too. If you already have 200 ETH, a pension, a stable job, and most of your house paid off, the area of focus for you is probably wildly different from that of a 21-year-old university student with $300 in their bank account and 10 times that in dogwifhat coin.
So usually, my advice is not really that helpful for just about anyone as none of you are me, and I don’t know enough about you to really help.
What I can do, however, is just simply talk about the stuff I’m doing.
I’m a terrible trader. I get anxious and hyperfocus on positions I’m in. This is usually not a good combination for a trader. I tend to overthink things and flip-flop on my positions and struggle to hold conviction on anything that I’m trading short term. Especially memecoins.
I’m a much better investor though. I have no problem with holding reasonably large-sized positions in majors. Bitcoin, Eth, Solana, Index funds, and traditional stocks. My timeframe for these assets is anything from multi-year to multi-decade, so the one-minute chart never comes into my thinking here.
So what do I do day to day to overcome my hyper obsessive, massively impatient, and analytical thinking brain and force it into a box that can continually make money?
Well usually, it’s finding projects to farm that are being under-focused on and then spending a ridiculously large number of hours calculating the possible upside from getting involved.
The reason I prefer farming to trading is that there is no chart. I cannot scare myself out of a position if suddenly the $1,000 I put to work is now worth $5,000. Because I’ll have no idea what its worth until possibly months later.
It is literally impossible to sell too soon when you’re farming because you have nothing to sell.
Of course, you can mess up by dumping the airdrop in the first minute like I did with Jito and then being sad when it doubles again, but that's better than having bought at a $10m market cap, sold at $30m, and then watched it go to $4bn which is likely what I would have done if it was a token I could trade.
How to find things to farm:
There are usually two sentences that I hear that fill my heart with joy.
It’s only for whales, there’s no point me being involved.
It’s being overfarmed, I’m going to skip this one.
Every single time I see this said in a Discord I get EXCITED, because usually it indicates the opposite of what the person saying it thinks.
The first thing I’ll do is head to Defi llama and look at the TVL of the project. This is usually the biggest indicator of the relative farmerishness of a platform.
For example, today I saw someone in a Discord say that Parcl was being overfarmed and they were going to skip it because they saw threads everywhere about it.
However, a quick check on their site shows that the current TVL is around $7m. This sounds like a lot, but when you consider they’ve already raised $11m in funding and MarginFI, a similar yet less novel project on Solana has $300m TVL you quickly realise that perception does not always equal reality.
Looking just at the numbers, Parcl is hugely underfarmed on a relative basis. So here is where I will place some of my farming capital as the returns should (if it does not get hacked and leave me with zero) outperform many of my peers farming more consensus projects.
This is the same process I used to determine Blur was underfarmed in season one when I realised it had less TVL than babydogeinuswap and despite the fact that everyone who enjoyed NFTs used it, the general perception was that it was only for whales and was being overfarmed. Thankfully my analysis disproved this and it later led to a six figure airdrop.
I’ll usually repeat this process for anything with a points system or a glimpse of a token somewhere down the line.
The absolute best mental trick that points systems to do people is making them feel bad if they’re not in the top ranks.
People will usually look at the top 5 positions and say aaaaaaa they have 10 million points, I have 1,000. This will be worthless.
And then they give up.
What they don’t do is do the slightly more advanced math to check what their % of total points are. This gives a FAR BETTER indication of the airdrop size you might get than simply looking at what the top 5 whales have. If the distribution of points is not linear, you might be surprised that you get more than you think you will.
The aim of the game is to be as early as possible farming projects that actually have a chance of being successful. There is no point farming 101 projects because their TVL is low if they have zero chance of actually being worth something, so the second part of the puzzle is determining what is and what isn’t a good project.
There’s no real easy answer to how I do this. Each project I guess I analyse differently, and a lot of it comes from pattern recognition I do automatically after spending many years reading whitepapers, seed investor lists, and exchange listing pages.
But if I try to put it into maybe three bullet points of what makes a good project, here’s my best attempt.
The project is the first of its kind or a massive improvement on an existing project.
Maybe this is something like friend tech in the early days when it's the first real socialFI project. Or maybe it's Blur where it's clear it's a HUGE improvement over a massive incumbent Opensea.
Similar projects have huge valuations or are hard to value.
An example here is something like Eigenlayer. Maybe Celestia is a close competitor that is now at over $12bn in value. It makes sense to me to still think Eigen is underfarmed even with 250m TVL because a 10% airdrop of a multi-billion $ project might still give you elite returns even though a lot of people are farming it.
The project has a chance of getting major exchange listings.
Major legitimate projects like Celestia, Arbitrum, and Optimism it was clear they would have day one listings as the major exchanges battled it out for volume. If you can pinpoint smaller projects that also might meet this criteria you can get outsized gains. For example, Maverick came out at over $1bn FDV because of a Binance listing. That's nuts really for a standard dex when all of its competition is sitting far lower. This is also the reason why I avoid farming privacy chains.
If a project ticks all of these boxes and I get a gut feeling that it's being largely ignored or underfarmed, then I will try my best to go hard on it as early as possible and then hope that six months down the line the work I put in now pays off.
Anyway, thanks for reading, hope this wasn’t too boring or rushed, and have a great Eigen eve.
gud read