I wrote recently about my crypto investing strategy. Shortly after, I noticed this brilliant tweet from Vinny Lingham:
In the past I’ve done each of these three, thinking it was one of the others. That led to a lot of mistakes.
For me, investing is defined as buying and holding assets with a long-term view of them appreciating in value. To be able to do that, you need to have a strong conviction in your overall investing strategy and the specific assets you invest in.
I think the other thing that’s important is to have a set of rules for yourself. Investing with a long term view can be difficult. There will likely be price volatility and shifts in macro trends along the journey. Having a set of rules for yourself helps to keep emotions under control and avoids impulsive decisions.
So, I spent some time working on my rationale for investing in crypto and the specific assets in my portfolio. Interestingly, this led to me selling three of my assets. Either I didn’t understand them enough or didn’t have enough conviction in them for the long term.
I also put together some rules for myself. Whilst I had most of these rules in my head anyway, it was nice to get them out and organise them.
The updated version is below. I hope it’s useful, I know it is for me. If you’re investing in anything with a long term view, I highly encourage you to go through a similar exercise.
Overall Investment Case for Web 3 / Decentralisation
People are starting to tire from centralised banks, government and big tech. Over the next decade, Web 3 and decentralisation will eat Web 2 and centralisation – in the same way software ate the world.
‘Web3 is the internet owned by the builders and users, orchestrated with tokens.’ – Chris Dixon (Why Web3 Matters)
- Only put in what I’m willing to lose
- Don’t over commit. Avoid a position where I have no choice but to take money out (and therefore risk selling at a low)
- Place bets around infrastructure and fundamentals (which are more likely to endure), rather than specifics (which are more likely to come and go)
- Have fewer, high conviction bets
- Take a meaningful position. Buy more in the dips
- Have a long term horizon (unless something macro materially changes)
- When the time comes, don’t be greedy. It’s fine to take money off the table and reallocate. Things don’t have to be held in full forever
Portfolio / Investment Cases
|Bitcoin (BTC)||Bitcoin becomes digital gold.|
|Ethereum (ETH)||Ethereum becomes the world’s dominant global banking and financial network. It will be the dominant platform for decentralised finance (DeFi).|
|Render Token (RNDR)||Render becomes the world’s global rendering engine for the metaverse.|
|Helium (HNT)||Helium becomes the leader in decentralised wireless networks and 5G infrastructure.|
|Solana (SOL)||In a multi-chain future, Solana will become one of a small number of dominant layer one blockchains.|
|Fantom (FTM)||In a multi-chain future, Fantom will become one of a small number of dominant layer one blockchains.|
|DeFi Pulse Index (DPI)||Diverse coverage of the decentralised finance (DeFi) sector. DeFi will disrupt traditional finance.|
|Bankless DeFi Innovation Index (GMI)||Diverse coverage of the high growth, early stage decentralised finance (DeFi) sector. DeFi will disrupt traditional finance.|
|Data Economy Index (DATA)||Diverse coverage of decentralised data-based products and services. These will disrupt the data monopolies built in Big Tech over the past 20 years.|
|Index Cooperative (INDEX)||In a world where Index funds become a significant percentage of the overall crypto landscape – Index Cooperative DAO will gain a significant percentage of the crypto index market.|
Lastly, here is my current allocation for each asset:
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