I can't tell if that's horrible opsec that Owl posted his home address (Destination Degenistan, Home of the Apes)....or maybe he is such an Apex Predator he DNGAF if someone shows up at his place?
wow ... these posts covering practical aspects of defi are amazing! Can you help me out with these?
(1) "Intuitively we know that it would be cheaper to allocate to a more volatile token due to the fixed costs (gas) and variable costs (slippage)." Can you explain the logic here? If a token is more volatile for example, the negative slippage could be v high. Thus, why would it be cheaper?
(2) Iguana - any possibility of providing a website that shows the charts you laid out on a real time basis? Like allow us to add a token and compare the return volatility of different projects etc.
(1) Generally you need a lower dollar investment to get equivalent exposure ($ change per day) with a higher volatility token. e.g. buying $4.5k of SPELL vs $20k of Balancer. Yes you need to account for spread/slippage which can be worse on volatile tokens, so you make a good point.
(2) This could be useful! Any suggestions on where we could host it? Maybe a Google Sheet would do?
On (2), while a simple Google Sheet will be fine, I guess placing it on (https://bowtiedisland.com/crypto-investing/) website would be even better? That way you can draw traffic to this Substack too :)
Thanks for such a great post. Could you guide me to know where to pull the correct data for current FDV, %vol change? On coinmarket, it's showed market cap and FDC, could we use those data? btw, for the bull case FDV, how can we calculate this or we based on the valuation method from the Defi Substack?
Hi Team, may you please share your portfolio allocation and coins for all of us to get an idea. This can help us in kind of following your portfolio. May be it can be used as a future article.
Once some base level of wealth is built via crypto, wouldn't it then be ok to make a few small, ultra-degen bets?
BTB says to never use leverage, but with enough wealth wouldn't those trades begin to make more sense? If your team were to make an ultra-degen bet, what would it be? Crypto options?
Bulls view was (buy) options because it is obvious that your investment goes to zero if you aren't right in a precise time window. That way you don't take on too much risk as a loss should be an expected occurrence.
I've seen people make it by taking on nosebleed level risk. Sometimes whatever edge you have can be gone if you don't hit it hard and quickly. Haven't seen anything that compelling in DeFi yet though.
love it - a lot of thoughts/ideas running through my head - related question for you - how/where the hell do you go for researching coins? I'm in crypto twitter but keep feeling like I only hear about coins (toke, spell, ohm, etc) once they've made it mainstream. Where/how can I research small caps before they go mainstream?
Iguana - would love to riff a bit on using FDV as a metric vs. Current cap. I always tell folks to ignore FDV because emissions schedules vary wildly from protocol to protocol. Curve, for example, won't hit its FDV for another 300 years. Tend to focus on current cap (price x circulating supply).
Using FDV, would agree with your analysis but not sure it's apples to apples from protocol to protocol.
We look at all three. Relative importance of each metric is case by case. By using FDV you risk being too conservative in some cases. Using market cap exclusively you risk missing incoming dumping. Hence, have to look at all the metrics and make a judgment call. For purposes of comps, we show both market cap and FDV, but when doing a deeper dive it’s important to understand what the supply dynamics actually are
Thank you for responding and appreciate the difficulty in trying to generate comps in an industry that doesn't have a ton of standardization. Am also just trying to use best judgement. Unlock schedules should be a standard part (and front / center) of project docs definitely the most opaque part of risk.
Iguana just exploded heads all over substack.....any chance we can get the formulas on those columns sir?
He does that to me daily in DMs
Any modifications to the portfolio construction article or keep as is?
Sure...
Column | Formula
A | Date
B | Price
C | Percent Change =(B3-B2)/B2
D | Standard Deviation =STDEV(D2:D31) #This is for 30 days
E | Annualized =E2 * sqrt(365.25)
F | Volatility of a $10k investment =(E2/SQRT(365.25)*10000)
G| Return to volatility comparison =E2/(F2/SQRT(12))) #12 months in a year ~= 30 days
H| Investment required to hit $500 volatility / day =(500/F6)*10000
I | Cost:Volatility =(trade_cost_usd/H2)/E2
Hi, for column A, I am assuming that there are 30 rows for each day of the month? Hence, the 30 day percent change would be (B31-B2)/B2?
Could you share how to automate the pulling of Coingecko daily prices via their API? I can't seem to do it via Cryptosheets haha.
Sorry I missed this!
What are you doing for the Bull Case FDV calculation?
That should be G*(1+F), MC augmented by the yearly volatility
Wow that's great, thanks
thank you
I can't tell if that's horrible opsec that Owl posted his home address (Destination Degenistan, Home of the Apes)....or maybe he is such an Apex Predator he DNGAF if someone shows up at his place?
I don’t live there. I do frequently vacation there though
Great post! Will need to read three more times
Thank you sirs, nice to see the different approaches.
Good Read
Hi, this is a great post! I recently subscribed to this substack. Is there a discord associated with it?
Welcome, please ask any questions here, we do not have a discord for DeFi Education.
do you plan to look at Temple DAO
Yes we can cover it - I am invested in it.
Excellent - thank you
wow ... these posts covering practical aspects of defi are amazing! Can you help me out with these?
(1) "Intuitively we know that it would be cheaper to allocate to a more volatile token due to the fixed costs (gas) and variable costs (slippage)." Can you explain the logic here? If a token is more volatile for example, the negative slippage could be v high. Thus, why would it be cheaper?
(2) Iguana - any possibility of providing a website that shows the charts you laid out on a real time basis? Like allow us to add a token and compare the return volatility of different projects etc.
Thanks man!
(1) Generally you need a lower dollar investment to get equivalent exposure ($ change per day) with a higher volatility token. e.g. buying $4.5k of SPELL vs $20k of Balancer. Yes you need to account for spread/slippage which can be worse on volatile tokens, so you make a good point.
(2) This could be useful! Any suggestions on where we could host it? Maybe a Google Sheet would do?
Good comments, thanks!
Thanks Iguana for the responses!
On (2), while a simple Google Sheet will be fine, I guess placing it on (https://bowtiedisland.com/crypto-investing/) website would be even better? That way you can draw traffic to this Substack too :)
Thanks for such a great post. Could you guide me to know where to pull the correct data for current FDV, %vol change? On coinmarket, it's showed market cap and FDC, could we use those data? btw, for the bull case FDV, how can we calculate this or we based on the valuation method from the Defi Substack?
Owl, when you talk about 5X target, you mean in BTC or ETH terms or in the American fiat unit?
Hi Team, may you please share your portfolio allocation and coins for all of us to get an idea. This can help us in kind of following your portfolio. May be it can be used as a future article.
Once some base level of wealth is built via crypto, wouldn't it then be ok to make a few small, ultra-degen bets?
BTB says to never use leverage, but with enough wealth wouldn't those trades begin to make more sense? If your team were to make an ultra-degen bet, what would it be? Crypto options?
Bulls view was (buy) options because it is obvious that your investment goes to zero if you aren't right in a precise time window. That way you don't take on too much risk as a loss should be an expected occurrence.
I've seen people make it by taking on nosebleed level risk. Sometimes whatever edge you have can be gone if you don't hit it hard and quickly. Haven't seen anything that compelling in DeFi yet though.
love it - a lot of thoughts/ideas running through my head - related question for you - how/where the hell do you go for researching coins? I'm in crypto twitter but keep feeling like I only hear about coins (toke, spell, ohm, etc) once they've made it mainstream. Where/how can I research small caps before they go mainstream?
We're addressing the same question and will be leveraging automation (e.g. scrapers).
Iguana - would love to riff a bit on using FDV as a metric vs. Current cap. I always tell folks to ignore FDV because emissions schedules vary wildly from protocol to protocol. Curve, for example, won't hit its FDV for another 300 years. Tend to focus on current cap (price x circulating supply).
Using FDV, would agree with your analysis but not sure it's apples to apples from protocol to protocol.
Thoughts?
Market cap + FDV + unlock/distribution schedule
We look at all three. Relative importance of each metric is case by case. By using FDV you risk being too conservative in some cases. Using market cap exclusively you risk missing incoming dumping. Hence, have to look at all the metrics and make a judgment call. For purposes of comps, we show both market cap and FDV, but when doing a deeper dive it’s important to understand what the supply dynamics actually are
Thank you for responding and appreciate the difficulty in trying to generate comps in an industry that doesn't have a ton of standardization. Am also just trying to use best judgement. Unlock schedules should be a standard part (and front / center) of project docs definitely the most opaque part of risk.
Great post!
Owl nailed it!
Thanks for reading! I use Zapper.fi + excel
Zapper.fi currently doesn't support BTC does it. Only EVM compatible chains
It does.
I think Zerion did or does support BTC watch only wallet addresses also.