This week, I was pretty wrong about a lot of things.
I thought the best-case outcome for Jito would be around $0.50, and that Tensorians were vastly overvalued at around 40 SOL.
So when Jito went to $4.50 within two days, and Tensorians doubled, and doubled again, I was pretty bewildered.
In hindsight, it was easy to see where I went wrong. I was applying neutral market logic to what is clearly now a bull market.
In a non-trending market, I was usually pretty accurate at predicting the rough value projects would launch at, where they should reasonably be positioned relative to similar projects, and where my entries and exits should be.
But this week, my entire mental model was blown so far out of the water. I had become the mid-curve, the one calculating things in FDVs, the one applying logic when all logic is lost.
If you’d have asked me 4 months ago what Solana DeFi projects would be worth at launch, I'd probably have said low 2-digit millions.
This calculation would have been based on relative TVL values to ETH, the fact that SOL was significantly cheaper than ETH, and that the general sentiment around Solana was that it was a dead chain.
I did, however, think Solana could do very well in the future, but I had all but written off the DeFi sector in general.
Thankfully, however, despite my lack of confidence in the sector, I still made the effort to farm on Solana. This is largely due to Ansem and Tolks screaming it from the rooftops at every available moment.
So even though I didn’t necessarily agree with their logic or numbers, when the risk to farm IS SO LOW, there is absolutely no excuse for not doing it.
When I'm wrong, I want to be in a position that the worst-case scenario is I’ve wasted my time, burnt some gas, or lost some negligible amount of money, rather than when I’m wrong I lose everything and have to go and live on the streets under a bridge.
This is why farming is SO good and why I think pretty much everyone should be doing it rather than trying to trade on leverage.
If you pick the right projects and apply some critical thinking, you can farm with very low risk.
You don’t need to spin up some kind of bot farm or even be that sophisticated. Just interacting as a normal user and thinking about how to add value to a platform is usually enough to be recognized time and time again.
And because there is no chart, it's VERY hard to mess it up.
If in three months' time the project goes nuts and you’ve been involved for a long time, you can end up making huge profits even if in the early days you weren’t 100% sure if the project or ecosystem would make it.
If it was a coin that was live and you were trading, maybe it went down 90% before doing that 10x and you capitulated the bottom because you never really had any conviction to begin with.
Farming removes the need to have conviction through the tough times. You just need to have patience, perseverance, and a plan.
I guess the main lesson here is that even if something is not that exciting today, if the risk of being involved is simply your time and a small amount of capital, the chance of profit is hugely stacked in your favour.
Some live examples today are things like ZK Era. I’ve been in so many chats where people have ignored it because it’s a “ghost chain” or because there are too many farmers. But the exact same thing was true on Arbitrum for the first six months of its existence, and everyone got angry when they missed a five-figure drop there too.
Another example is Friend Tech. In the early days, people were valuing this in the high single-digit billions. Then a few months later TVL drops down 20%, and people get a bit bored, and suddenly it’s a worthless project??? Will this always be the case, or when it gets within two weeks of the airdrop will it suddenly be the most innovative social platform in all the world again and have a $5bn FDV?
Solana too. I’m already seeing people discounting doing anything on Solana because after Jito “it will be too crowded.”
I think this has been said about everything ever since the dawn of the Uniswap airdrop. Time and time again, it is proven wrong because in this industry, people have 0 attention span and are incredibly lazy despite the fact wealth is continually available if they just reach out and take it.
So anyway, this turned into a bit of a rant, but I guess it somewhat describes my mental model for how I try to frame risk.
I’d much rather be incredibly wrong on a prediction but still make money due to farming it anyway than take a wild trade on a hunch and lose all my money when I’m wrong.
(Of course, this is a bit overdramatised; I do do both. There are still things I buy and trade because they probably go up, but on the whole, my ADHD brain does far better with farming because charts are bad for your head and your mind and cause SADNESS AND PAIN!!)
As always, I am an idiot with a keyboard. Do not take my advice unless you also want to live under a bridge.
Have a great day!