Hey all, today’s guest is DegenSpartan – an anonymous profile that posts some of the most insightful points about the state of the market and protocols.
I sent him some questions I wanted to get his opinions on, below is the answers to those. This is a nice light read that has nuggets of wisdom for those who identify as retail traders/investors.
You can follow him on Twitter over here: https://twitter.com/DegenSpartan
anyone else crunched the math behind the BTC tokenizers and also concluded that they only way a non centralized custodial version thrives is if volume and usage is MASSIVE, or if defi borrowing/lending on tokenized BTC is high?
May 19th 2020
1 Retweet21 Likes
my portfolio is barely 1.1x leverage most people really should not be using leverage unless they understand it well i know so many guys that blew up imo crypto is more of a long term survival game rather than a return maximizing speed rush
If any fund pitches a strategy that uses high leverage, you have to be careful. Crypto assets are extremely volatile and while leverage can juice up returns, they can also wipe out a fund. https://t.co/43SLwRkt5c
May 22nd 2020
3 Retweets51 Likes
KK: How did you get involved with crypto?
DS: I came across it in 2013 when the market was bubbling and 1 BTC was being talked about being worth 1oz of Gold. I was very intrigued by it, and that was when when I made my first bitcoin wallet! I think naturally most people begin their journey with Bitcoin and later branch out as they explore more in the space. At that time though, I couldn’t even understand how private and public keys were different, haha!
I think the knowledge barrier to entry back then was significantly higher with a lot less resources to learn about crypto. The newcomers these days have a different problem – information overload and avoiding the charlatans!
KK: What’s your background like?
DS: My background is purely finance and I have zero coding experience at all, although I am trying to improve myself in that aspect. I was doing stocks for quite a few years and I was marginally beating the local benchmark before I decided to just focus on crypto as an asset class for investing.
KK: How do you view the crypto space and what are you excited about the most?
DS: I view the space as being very diverse, but still so nascent. There’s people who are all-in and evangelists. There are others who are just here to eat alpha and run. Of course, the bulk of participants are still clueless retail.
I am most excited about a future where people can opt-in to join the crypto movement and vote with their money by moving out of fiat currencies and into cryptocurrencies. It would be great to have a vibrant ecosystem that can support that migration of people looking to seek refuge from their own country’s fiat. It will take a while to get there, but the journey has been interesting so far.
KK: How does your investment criteria differ compared to the more “sophisticated” funds?
DS: I actually have a very Peter Lynch style of evaluation. I use myself as a benchmark and see if I can understand it (keep in mind, I have no coding ability at all) and see myself as paying user. If I don’t care about it, it really makes me wonder who will!
As someone that used to pick stocks based on fundamental analysis, I try to port over whatever is applicable frameworks I can to evaluating investments. This isn’t too far off from what TokenTerminal has done with constructing project “earnings” and transmuting it to “PE ratios” to rationalize valuations. I love these approaches and I do find them to be useful factors in determining relative valuation.
At the end of the day, I think the most important thing about being a retail investor is knowing your edges over the funds out there. I have no monthly or quarterly reporting obligations, no benchmark to beat, no fund raising targets, no KPIs, no unscheduled redemptions and no need to seek approval or write reports explaining any of the decisions that I make. Anyway, who cares if you underperform funds? I didn’t come into crypto to compete against funds!
KK: What do you think most people fundamentally misunderstand about the space from retail to VCs?
DS: I think everyone universally misunderstands that a fixed supply = scarcity. I believe that this is also why the believers in Bitcoin are so numerous – it’s an easy meme to understand. I do not think that it is right though.
Another thing that retail particularly misunderstands is that there is no need to aggressively day trade with high leverage using special technical indicators to become successful. This isn’t to say that profitable traders are a myth, but rather that they are the exception to the rule. Investing in crypto does not mean you need to become a day trader!
KK: Is there anything that i’m missing that you’d like to let other people know about?
DS: I feel that generally within the space, people need more ownership in their decisions and responsibilities. People need to know that if they mess around with real money, they are probably going to lose it, and the only person they should blame is themselves.
DS: I know a lot of people feel differently, and that the path to adoption should be making to easy to for normies to join this revolution, but I disagree. Crypto is the wild wild west and while it doesn’t necessarily have to be this way, I think people should have the default mindset that EVERYTHING IS A SCAM and EVERYONE IS A SCAMMER.
DS: Sometimes crypto is too rainbow and kumbaya to me. I don’t think it paints an accurate picture of how dirty this space actually is.
KK: What are your top 3 long picks and top 3 short picks and why (briefly)?
DS: Easy peasy!
$ETH (0.021 BTC) because to me, ETH is money
$SNX ($0.78) for their innovative derivatives platform and sUSD stablecoin
$RUNE ($0.10) because I strongly believe in that the ecosystem needs a decentralized cross chain swapper
My short picks would be:
$MKR (1.74 ETH) because I have no faith in any self-leveraging model being able to scale supply to meet demand
$REP (0.076 ETH) because I do not believe anyone is going to use it to the extent that the market is valuing it now
$BSV (0.02 BTC) because Craig is definitely not Satoshi
KK: Could you elaborate more on why you believe that any self-leveraging model won’t be able to meet demand (MKR)?
DS: To elaborate, I think the overlap of self leveraging DEX traders with eligible asset owners is not enough to generate the DAI necessary to scale. Throw in their weird 3-stakeholder system and finally add in a terrible token model (burn model), it is very hard for me to be bullish on $DAI as a scalable stablecoin option, let alone the $MKR token as an investment. Make no mistake though, I sincerely believe that DAI can be very stable and has less risks than centralized alternatives, but being unscalable in my opinion is a non-starter for me
KK: Thanks for your time Degen, always love hearing your spicy takes.