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  • The DeFi Trade

    Posted by sku on March 13, 2023 at 5:44 pm

    I’ve been considering whether DeFi tokens might be a good buy at these levels. I don’t see many people talking about these tokens right now with a lot of focus on ETH and BTC right now.

    There are two key recent events of the past few days:

    • Stablecoin depeggings
    • US banking sector issues

    Both of these seem to have shaken up the current crypto narrative. And both BTC and ETH seem to have caught a bid.

    DeFi also plays a big role in these stories.

    • In the case of the depegging we saw stablecoins eventually recover their pegs, but much more importantly, many DeFi platforms largely performed pretty much as expected in these conditions. We saw very high usage of DeFi,
    • In the case of banking sector woes, clearly DeFi offers an alternative financial system, which is slowly being built out, primarily on Ethereum and it’s L2s.

    Rather than looking for “100x gems”, I thought I’d look at some of the biggest blue chip DeFi platforms on Ethereum, to see where there might be the possibility for some low risk entries. Many of these platforms are well used, trusted, and have almost become part of the furniture. Ethereum users take some of these trusted platforms for granted now. But their gov tokens can be picked up at near pre-2020 bull market prices. My theory goes that if the current “anti-bank” narrative continues, DeFi tokens could be next to catch a bid. And given their price point, entry here seems like a low risk play, with large potential upside.

    I decided to go long on both Aave and Uniswap. Both have continued to show their enduring popularity through the current bear market, and feel like trusted brands to crypto natives.

    • Uniswap is top of the 30d burn leaderboard on Ultrasound money. It saw incredible levels of use this past weekend. It’s an absolute blue chip crypto brand in every sense.
    • Aave is one of our biggest lending/borrowing platforms, and equally has built quite the reputation for itself. It’s token has only a $1b market cap, but $5b of assets secured on chain.

    And both of them look like in a good place for entries at this point, looking to catch a theoretical DeFi trade that could be incoming. They are both current nibbling at key resistance levels. But given current market conditions, it seems that breaking these resistance levels could lead to large rallies.

    • I didn’t buy Maker. While I have a great deal of respect for the platform, it didn’t feel like a sure bet like the above two. In addition, the depegging, even if brief, is still a bit of egg on face.
    • I didn’t buy Curve/Convex. I already have a longer term position here, and don’t wish to add further. Due to prolific ongoing printing of these tokens, they are not as easy to stomach a long.
    • I ignored Liquid Staking tokens and Layer 2 tokens. A lot of these have already seen some time in the spotlight in recent months, and I wanted to focus more on DeFi bread and butter apps.

    Anyway, just some content I thought I would out, just for those of you using the Caches platform. Let me know what you think about my thoughts. Why am I wrong? Why might I be right?

    sku replied 2 weeks, 3 days ago 1 Member · 1 Reply
  • 1 Reply
  • sku

    March 14, 2023 at 10:13 am
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    7.6% on Uniswap, and 6.3% on Aave since my entries yesterday. Not bad going!