Being too overconfident in an investment can ruin your portfolio.

Here are the 9 most common traps to watch out for:
Trap: Overestimating Your Alpha

A paid discord isn't really alpha.
Neither is watching YouTube or reading Twitter threads.

Alpha is having an EDGE over everyone else.

2 simple ones:

1) Information asymmetry / inside knowledge
2) Watching onchain movements.
This is the wild west where "insider trading" runs rampant.

Information Flow:

Builders / Team Members -> VCs & Seed Investors-> Whales / Connections to Insiders -> Retail (most people)

The lower you are on the chain, the more vulnerable you are.
Trap: Doxxed Founder

"I won't invest in anything with an anon founder"

There are plenty of projects that went to 0 with a Doxxed Founder.

1. Being doxxed doesn't mean they're immune to evil or being dumbasses.

2. I suspect that some doxxed founders are fake.
This is Jacob Wilson.

He went to Stanford with an undergrad in Computer Science.

After graduating, he worked at Google. Now he's working on launching a new Layer 1.

Want to invest?

I made this shit up, and I generated this fake, nerdy white guy with A.I.
Trap: Thinking You're Early

Buzz is starting to pick up.
You're seeing it everywhere on social media.

You FEEL the FOMO and ape in.

The coin immediately dumps and you're left holding the bag.

Find projects, invest with conviction, and let the gains COME to you.
How can you ACTUALLY be early?

That's a separate thread on its own.

Some high-level ideas for you:

1) Follow on chain movements

2) Research projects before tokens are available

3) There are a few smaller accounts that are good at spotting gems.
Trap: A Venture Capital Invested!

You see a reputable VC logo on the homepage.

It must be safe to ape in because the gigabrains invested!


1) Some spray and pray and don't do solid diligence.
2) They're human and make mistakes.
3) Three Arrows Capital - enough said.
Solana's wormhole bridge was exploited for $320m.

Jump Crypto came in and bailed them out - Disaster averted.

"Terra Luna will be fine. If something happens, Jump / 3AC will bail them out 🤷‍♂️"

They tried, but it wasn't enough to save the protocol 😔
Trap: It's Audited

3rd party firms review the code and give it a thumbs up.

Take a look at Rekt's leaderboards.

Bad actors exploited several protocols even though they're audited.

1) Hacks are evolving
2) Some can be inside jobs
3) Not all audits are thorough
Trap: Models and Charts

The Stock2Flow model was often quoted in the previous cycle.

Because of its popularity, many people were expecting $100k bitcoin in the last cycle.

Well, it missed its mark - it's not even close.

"The Map is not the territory"
Trap: An Influencer's Opinion

This is a common and dangerous one because of the authority bias.

1) People make mistakes.

2) Some are bad actors using their audience as exit liquidity.

3) You don't know when they're buying and exiting. Or their intent behind the trade.
Trap: The Echo Chamber

When you love a project, it's easy to fall into confirmation bias.

You join the discord and follow the top shillfuencers.

So you hear 100x a day how AWESOME the project is.


A good place to find them is in the comment section of threads.
Trap: Dunning-Kruger effect

It's a bias where it's easy to overestimate our own abilities.

It's kinda like when people think they are geniuses in the bull markets.

And start leveraging more.

When you're flexing your Crypto gains to normies, it's time to take profits.
This isn't black and white.

I PREFER a protocol be backed by VC, is audited, and has doxxed founders.

And of course, not all influencers are bad.

I wanted to highlight potential blind spots you might have.

Be careful out there.
Use More Probabilistic Thinking

Most people think of investing as a checklist

✅ Passed an Audit
❌ Not passed an Audit

Instead, you should think:

1) Who conducted the audit and their reputation
2) This increases the PERCENTAGE that it's safe to invest with.
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More from @thedefiedge

Aug 12
The most profitable narrative in the bear market:

"Real Yield."

But what is it and how does it work?

Here's a Breakdown and 7 Protocols that Fit the Criteria:

(including a few hidden gems)
Most DeFi projects incentivize liquidity by providing inflationary tokens as rewards.

People LOVED it!

"If I provide ETH - USDC in a liquidity pool, I get X token at 200% APR!"

So projects could bootstrap growth this way.
The Race Against Time

This buys time to create more revenue-generating products.


1) The system fails if they keep printing tokens, but there's not enough value generated.

2) These users ain't loyal. Once incentives lower, they rotate to the next bright shiny DEX.
Read 26 tweets
Aug 7
If Crypto has ever affected your Mental Health, read this:

I'm not a medical professional.

I don't have all the answers to this complicated subject.

I'm sharing my story and what has worked for me.

10+ different doctors and therapists gave me feedback on this thread before publishing.
Mental Health Crisis

The world is going through a mental health crisis.

Some Stats from USA:

• 2.5 million youth have SEVERE depression

• Alcohol-related deaths jumped 25.5% between 2019 -> 2020.

• Over half of adults with a mental illness don't receive any treatment
Read 46 tweets
Aug 4
Unpopular Opinion:

It's ok to have your money doing nothing.

• I have some cash sitting in a checking account.
• I have some BTC / ETH that's NOT earning yield.

I am aware of inflation.

Instead of thinking of it as doing nothing - I think of it as playing defense.
You don't have to earn a yield on EVERYTHING.

That thinking led people to put their BTC on Celsius or their savings on Anchor Protocol.

And then losing everything.

I like to diversify.

Some of my ETH is in cold storage.
Some are in DeFi as stETH.
I think about my money like soldiers.

• Some soldiers are on offense - they're being invested or earning yield.

• Some soldiers are on the defense - it's there for protection.

Also one more thing about yields...
Read 4 tweets
Jul 30
Doing your own research is the most powerful Edge in Crypto.

But most people suck at research.

Here are my Crypto research frameworks to make it easy:

(so you don't have to rely on influencers)
A Framework for Research

Researching crypto is overwhelming.

Where do you even begin?

My approach is to break it down into 4 broad areas:

• Technical Understanding
• Profit Skills
• Crypto Skills
• and Areas Outside Crypto

Let's dive into it!
AREA 1: Technical Understanding

You have to know what you're investing in.

You can't see the value of Starknet if you don't know what ZK-Rollups are.

Understand your experience level, and realize there are skills for each level.

It's kinda like skill trees in RPGs.
Read 40 tweets
Jul 23
The 10 must-have Crypto research tools I use every day:

(most are free)
Uniwhale (Analytics dashboard)

I use this to track bridge activity across different layer 1s.

Polygon (MATIC) has been on a roll lately.

I can use UniWhale to look at the deposits + withdrawals and get a bigger picture of Layer 1 trends.
Dune Analytics (Analytics Dashboards)

Dune lets you visualize different metrics into easy-to-understand charts.

Everything from DeFi usage down to dapp-specific dashboards.

I invest in GMX and found a dashboard that helps me see important indicators.
Read 19 tweets
Jul 15
Warren Buffett & Charlie Munger used mental models as an edge to become the greatest investors in history.

There are hundreds of mental models.

I found 14 that will help you become a better Crypto Investor:

(including common investing traps)
What is a Mental Model?

Mental models are concepts to help us better understand the world.

Your thinking is limited by your own experiences & biases - Mental models are a way to gain wisdom from entire fields.

Understanding them will help you think clearer.
/1 Cockroach Theory

When there's bad news, there might be many more negative events that are coming.

Seeing one cockroach means that there's more hiding.

If a company shares bad news, remember that they're often hiding more bad things to buy time.

(Like Celsius did)
Read 33 tweets

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