Author: jez

Compiled by: TechFlow

Traditional finance (tardfi) has decades of experience and a well-established regulatory system. These "investor protection" mechanisms are often ridiculed, but they do effectively reduce risk. In contrast, the cryptocurrency space is like the Wild West, a relatively niche arena that uses bloody lessons to relearn the rules of traditional finance. In this environment, competition is unequal, and some people understand the "unwritten rules" better than others.

The purpose of this guide is to share those lessons learned through experience. Unfortunately, the people who need this advice the most are probably watching funny videos on YouTube or following lilmoonlambo instead of reading my article here (as guide writers always think). However, I hope that you, as an informed reader, will find some of this helpful.

I liken crypto to a massively multiplayer online game (MMO) because it really has a lot of similarities: health points, levels, online friends, player-versus-player (PvP), player-versus-environment (PvE), a bustling town square, and an economy—except that “gold” here is worth more than World of Warcraft’s gold. This is the origin of the “monetized metaverse.”

The following are ranked in order of potential impact on your investment results (if you haven't already implemented or understood them).

Teamwork: Don’t be a lone wolf

Many people who enter the crypto world are born contrarians or like to go it alone. After all, it takes a lot of courage to ignore the dissuasion of family and friends (if they know). Moreover, once you have tasted a little success, it is easier to feel that you are "unique". "I just need to listen to the voice of the market!" - said the typical lone ranger.

But I want to tell you, give up this "lone wolf mentality"! The market is lagging, it will only tell you what you did wrong after you made a mistake, and the crypto industry changes too fast, there is no time for you to slowly learn lessons.

You need to find a group of excellent teammates to fight together. These teammates should be morally upright, hardworking, and like-minded "workers". The most important quality is resilience - make friends with those who are upset about their mistakes and take quick action, and stay away from those who only "comfort themselves". A high-trust chat group covers a wider range than you can fight alone, and can quickly tell you what is right and what is wrong. The most helpful feedback is often straightforward and may even be harsh - but even indifference is a kind of feedback.

If you can't find a team, reflect on your "value proposition". Generally speaking, unless you meet and make friends offline, invitations to join a team are usually based on "what value you can bring" and "whether you fit in". The best teams are made up of strong individuals - improve your ability and reputation until you can join the team you want as an equal, rather than joining as a "handout".

Here are some of the types of "god teammates" around me:

• Mentor: Someone who provided you with valuable experience early on, like me writing this guide now.
• Partners: At critical moments, we invest 10 hours a day together, chat 2,000 messages, and make plans.
• Signalman: A discerning partner who can help you distinguish between solid ideas and wild ideas.
• Prospector: The bolder partner responsible for discovering new opportunities for everyone to sift through.
• Guide: A technical expert who can solve various technical problems.
• Expert: An advisor who provides professional advice in a specific situation.

Many people think that so-called "secret organizations" are some mysterious conspiracy groups, but in fact they are often just chat groups composed of friends who grew up together and now have a certain influence.

The Importance of a “Home Base”

Not all group chats are created equal. There is a special kind of group chat called "Home Base" that is the first place you log in every day, the first place you reply to messages, and most importantly, the first place you share information.

When deciding whether to invite someone to join your high-trust group chat (in order to improve team efficiency), here is a counterintuitive suggestion: try to avoid inviting high-profile accounts, because they often already have their own "home base". Instead, those "newcomers" who are still full of energy and do not have a fixed team are the most worthy of consideration.

The risks of complacency

Each group chat has its life cycle.

At its peak, most people in the chat room were passionate and eager, often driven by new, smart people who hadn’t yet achieved success but looked promising.

However, over time, group chats inevitably become complacent. Members gradually reach higher levels, and the pace of the "game" becomes slower and more methodical. The content of daily discussions decreases, and the topic begins to turn to areas such as life and politics.

If you want to stay at the forefront of the industry, make friends with emerging and promising people and join group chats that are still "hungry". Think about the passion and desire you had when you first entered the industry, and immerse yourself in such an atmosphere again.

Choose a career and find your strengths

To succeed in this space long term, you must develop real advantages. Simply buying tokens that will rise in a bull market is not an advantage - but being able to recognize the signs of a bull market is the key. Joining a group chat that teaches you how to operate may give you a short-term benefit, but this advantage often wears off quickly. Being able to make money consistently and steadily in a professional field is the real advantage.

Different strategies suit different personalities. If you are a patient and risk-averse player, you should not enter the high-risk arena of "pump.fun"; similarly, if you are a risk-taker by nature, it will be difficult to stick to the field of liquidity mining for too long because you may be quickly distracted by other things.

Here are some successful skill categories organized according to different risk appetites.

DPS - Trader

These players focus on directional trading and pursue high-risk, high-reward opportunities. Those success stories often mask the losses of most people. To become a DPS main force, you need to have a high risk tolerance, excellent risk management skills, strong mental toughness, and the ability to maintain fighting spirit in the face of failure.

Trench Warriors

Shitcoin traders are the most diverse of all professions - the worst (and even average) performers are terrible, while the best are excellent. Players like req and nbs are able to take full advantage of on-chain information resources. If you consider yourself a "shitcoin trader" but haven't mastered your own on-chain analysis tools, you have a lot of room for improvement. In my opinion, this is the only true alpha in this field.

While trashcoin trading is a popular entry point due to the low capital threshold and high potential returns, this style is difficult to scale to higher levels. The problem is liquidity - newly issued coins are illiquid, which leads to increased slippage if you try to trade with a larger capital scale. In fact, buying too many coins may even cause the price of the coin to crash because you have to bear more distribution pressure. Trashcoin trading also cannot be scaled horizontally by increasing the volume or number of transactions because the failure rate is too high.

Those who have managed to get out of the shitcoin market are advised not to look back easily unless it is a special case or you have a real advantage in it.

Hunter of quality new things

The core of the strategy of "hunting for high-quality new things" is to find a new token with strong fundamental logic, enter the market as early as possible, and enjoy the subsequent appreciation process. Unlike those "trench warriors" whose holding periods are calculated in days or even hours, this strategy is based on fundamental logic and usually takes weeks to months to see results. Of course, ideally the market will quickly recognize this logic. This is also my personal favorite style because it does not rely on "luck" and is more repeatable. The ideal operating range is: buy when the token market value is between 50 million and 100 million US dollars, and exit when the market value is about 1 billion US dollars. This strategy can be easily expanded to a higher investment scale.

Why choose something new?

The core logic here is that "the market has not priced this thing correctly, it should be worth more." New things are easier to achieve this than old things, mainly for the following two reasons:

Time factor: The market has a shorter time to price new things, so its value is not yet fully reflected.

Capital flow: New things have fewer existing holders and more potential buyers, so there is more room for capital to flow in.

Of course, this does not mean that it must be a brand new token. Some old tokens may also become opportunities if they have a clear transformation direction, but they may be a little difficult to develop due to the resistance of existing supply.

How do you find great new things? The answer is “you’ll know it when you see it.” But if you don’t know where to start, here are some tips:

Is it novel enough?

This is the most important criterion. Pioneers often gain momentum beyond expectations, and their risk/reward ratio is very high. A brand new trend often triggers new discussions about the industry, and all attention will eventually return to the original thing.

Is there a flywheel effect?

A flywheel effect is a self-reinforcing cycle. For example, Shitcoins have a natural flywheel effect - as the price rises, holders get richer and more excited, and tell more friends, forming a positive feedback loop. Other flywheel effects may be more complex, such as the Bonding Curve, which can effectively kick-start a project's activities through deterministic early participation and guaranteed income incentives.

Are there barriers to entry?

Onboarding friction is an important part of verifying investment logic. If there is no onboarding friction at all, you need to ask yourself: Why am I so lucky to buy at a low price? Maybe the current price is already reasonable. At the same time, the existence of onboarding friction also means that there may be opportunities to lower the threshold in the future. For example, Rollbit's migration from Solana to Ethereum, the expansion of the ultra-liquid spot ecosystem, and even the launch of Bitcoin ETFs are all typical cases of lowering the entry barrier. The reduction of the threshold often attracts more funds to flow into the market, and those who invest their energy early usually benefit from it.

Meme priest

If the Gem Hunters rely on fundamentals for support, the Meme Priests completely abandon these boring things. Meme Priests are NFT traders in this cycle. They use their intuition to catch market sentiment and look for Alpha. Just like NFT investment, buying and then "lying flat" is usually the best strategy - until this strategy no longer works.

However, this path requires great faith. You must be able to withstand the pressure of market retracements, and also accept the negative emotions that such retracements may bring. The best meme priests can even change the chances of success through their actions. For example, baproll and spx6900, or dbl and fartcoin, are typical cases.

From another perspective, Bitcoin can also be seen as a huge Meme on a larger level. When I look back on my investment experience, I find that if I just “lay flat” and do nothing every time I buy a Meme, my returns often exceed those of “active investment” operations. I wonder if this strategy also applies to you? Perhaps this is a question worth thinking about.

Leverage Wizard

Of all the trading categories, leveraged traders have the highest risk of failure. Their behavior is sometimes no different from that of "problem gamblers." Based on experience, the problems of most leveraged traders are: using too much leverage, holding losing positions for too long, and trading too frequently. I once joked, "There are no successful leveraged traders in this world, only those who haven't blown up their accounts yet."

Leveraged trading seems simple, and there are always a few opportunities every year that make you feel it is "easy". For example, the approval of the Bitcoin ETF or some major events. However, at other times, leveraged trading is more like a brutal PvP battlefield. Even if profitable, the benefits of leveraged trading are often far less than simple asymmetric spot investment opportunities.

If you are considering choosing this category, I would strongly advise you to give it a go.

Farmers - Tank meat shield

Tank players are virtually indestructible (unless they encounter smart contract risk). They have very little to lose, but their gains are capped. Tank play is particularly suitable for investors who are very patient, risk-averse, or have limited time.

Stablecoin staking players

By providing liquidity to users or projects, they can obtain stable income. Currently, there are mainly the following sources of income:

Funding Rate Trading

When market demand is strong (such as when Bitcoin reaches an all-time high), the market demand for margin trading will be very strong, pushing up the funding rate (the annualized interest rate paid by longs to shorts). On major currencies (such as Bitcoin and Ethereum), this rate sometimes exceeds 20% and penetrates into the on-chain stablecoin market.

RWA Benefits

Treasury bonds are the most common and liquid RWA that has been successfully introduced into the crypto space. In contrast, real estate and other forms of real-world asset returns are not recommended by me due to their poor liquidity and high risk.

Token incentive income

A major innovation in the DeFi space is to reward users with tokens for providing funds. Although the incentive mechanism is more complex today, there is still an opportunity for unexpected surprises. This is a true "player versus environment" (PvE) model, as project parties are happy to exchange the tokens they print for liquidity.

In addition, "market making liquidity provider" is an emerging role in this cycle, with high and stable returns. For example, GMX liquidity pool, as well as projects such as Jupiter and Hyperliquid are all good choices.

Sybil/Wash Strategy

For those who are deeply involved in crypto projects, this strategy currently offers the best risk/reward ratio, as it usually requires only a small investment. The core idea is to participate in a new protocol (either as a user or by contributing to trading volume) as long as the expected rewards exceed the costs. However, this approach is gradually losing its effectiveness, as more and more projects have realized that such "farmers" are exploitative and have begun to adopt linearly designed reward mechanisms to curb this behavior.

The essence of this approach lies in an implicit consensus - projects need certain key indicators (such as the number of users, total locked value TVL, and transaction volume) to increase valuations and attract new users. Unlike those who provide actual liquidity support, Sybil/Wash (i.e. users who forge identities or fake transactions) only create a false prosperity. Even so, there are still many projects willing to pay fees with their own tokens just to show a beautiful data dashboard on Dune Analytics.

The most aggressive operations I’ve heard of are usually programmatic and have been struggling with detection mechanisms. For example, once I heard that there was an automated operating system consisting of 12,000 robots in a project, I decided not to touch zkSync again.

If you want to try this approach in practice, one possible approach is: when you find a new project with potential, interact with it using a few accounts that you normally use.

Support Players - Other Categories

These styles are neither trading nor staking, but they are unique enough to be classified as a separate category.

Insider

There are many types of insiders, some are helpful to the project, and some may be malicious. But in any case, being an insider is a privilege, and they have much less risk than ordinary investors.

So what is the difference between an investing insider and a seed insider? It’s usually the quality of the deal — in the past, venture capital could be a signal of deal quality, but that is changing.

In fact, most project founders are more willing to accept private messages (DM) than you think, especially in the early stages of the project. For example, NBS’s pre-sale strategy: wait until the pre-sale is about to end before participating, and privately message the developer at the same time, which is also a manifestation of an internal strategy.

Builder

If you’re a builder, my only advice is: stop reading this and get back to building! Maybe this article will help you understand your personas better, but nothing is more important than iterating and finding product-market fit (PMF). Think about the best builders you know — are they reading this?

Onchain Rogue

There are many untapped opportunities in the blockchain field, and those with technical ability, curiosity and energy can explore them in depth and profit from them. For example, sniping, sandwich attacks, randomness exploits, etc. These edge cases are waiting for people to discover and exploit.

Leveling Guide

When trying to level up, you need to be clear whether you are in "speedrun mode" or "hardcore mode".

Speed Run: This mode allows you to restart after a failure. It is similar to "Hypergambling" and is suitable for people who have other sources of income or students with high income potential in the future. Because there is less fear of failure, speed runners can take more risks.

Hardcore Run: This mode has a low tolerance for failure. For example, if your funds are life savings, or you live in an economically poor area, or even need to support family members, then you cannot bear the risk of losing all your funds, and this is a hardcore run.

The stage of assets of four digits or less

If you already have a job or are in school, you can skip to the next section.

At this stage, your time would be better spent earning fiat — a minimum wage job would equate to a 150% annualized rate of return (APR). And I believe you, dear reader, can do more.

In reality, you can’t get enough returns on a portfolio of this size to justify investing a lot of time. The only exception is Sybil airdrops, but that doesn’t require full-time commitment. 10x returns are rare and should be reserved for higher asset levels.

If you live in an area where job opportunities are scarce, try joining a protocol as a community manager or other role they need. The easiest way is to become part of the community as the protocol grows so that when they need to hire, you are already a core member of the community.

Five-digit hell - Focus on increasing fiat revenue

Welcome to the trenches, where every dollar counts like ammunition on the battlefield—it’s there to help you find that 10x opportunity.

Many people try to be “trench warriors” without really mastering the required techniques, or take the plunge and try to become “leverage wizards.” These people usually get stuck in five-digit hell until the bull market pulls them out—only to quickly fall back down.

However, I have found that those investors who hold MemeCoin for the long term or are good at finding "good new things" are often able to successfully break through. Their strategy is simple: firmly buy and hold spot assets.

Whether you choose the hardcore mode or not, Sybil airdrops are a low-cost way to participate. Just one large, non-linear airdrop opportunity is enough for you to graduate from this stage.

Six Figure Hell - Searching for a 10x Return

Grasp the best point. When your capital reaches a certain scale, you can easily seize a 10x return opportunity without worrying too much about the capital scale or slippage. In the "New Opportunity Hunter" section, it is mentioned that the ideal investment opportunity is usually a market value of 50 million or 100 million US dollars to grow to 1 billion US dollars.

I’ve personally escaped six-figure hell four times and have been lucky enough to never fall back in. The strategy has been the same each time:

• Keep an eye out for new opportunities: Always keep an eye out for new projects or trends with potential in the market.
• Test your hypothesis by investing a small amount of money first.
• Hold a large position and hold firmly: After confirming the hypothesis, invest most of the funds and wait patiently for the verification of the strategy.
• Take profits when the market is hot: When you find that everyone in the market is talking about this project, it is a good time for you to exit with profits.

Looking back at each successful experience, there is one thing in common: I bet on exchange tokens. After all, speculation has always been the most lethal product-market fit point in the cryptocurrency market.

Seven Figures Hell - Looking for a few 2-3x returns

When the size of funds reaches seven figures, looking for some 2-3 times opportunities is the key to get out of trouble. The overall strategy is similar to the six-figure stage, but it requires more patience and repetitive operations. However, as the size of funds increases, the difficulty of operation also increases, especially maintaining flexibility in market fluctuations.

At this point, the biggest challenge is how to allocate your funds. You may find that some projects do not have enough liquidity to support the investment size you want. This forces you to diversify your investments. At the six-figure stage, you could focus all your funds on the best ideas; but at the seven-figure stage, this approach is often no longer realistic.

When there are no new opportunities that are attractive enough in the market, temporarily parking funds in stablecoin liquidity mining (Stable Farms) is a good choice. This method provides stable returns while giving you time to wait for better investment opportunities. Patience is particularly important at this stage.

In addition, between different “good new things”, it has become more attractive to park capital in stablecoin farming. Patience is particularly important at this stage.

Eight digits and above

At this stage, what else needs to be said? The only thing people who can reach this level need to remember is: "Don't screw it up."

Don't stand in the fire pit

Avoid the following common mistakes.

Avoid trading when you are emotionally drained

Learn to recognize your emotional changes. When you feel yourself starting to lose control, sell your positions decisively and temporarily leave the market. Chasing losses never brings good results, and it is wise to calm down.

Avoid random bets after a big win

After a big win, it’s easy to make stupid losses out of overconfidence. I call these “euphoria trades.” No matter what kind of win you just experienced, always stay rigorous in your trading process and avoid being swayed by emotions.

Avoid circular cashing out

When trading, always ask yourself one question: "Who is left to buy?" The nature of the market is the flow of funds, not static. Sometimes, some assets look safe just because everyone is holding it, but this does not mean that it is really risk-free.

Forget about floating P&L and historical highs

Dwelling on past mistakes only wastes your energy. Obsessing over these things will cloud your thinking and affect your next decision. Let go of the past and focus on future opportunities.

"Insider information often causes the most losses" -cl207

When hearing so-called "inside information," carefully evaluate your position in the information chain. The further away from the source of the information, the more likely you are to become a "buyer" providing liquidity to those who need to exit.

Don’t add to your position when you are losing

"Losers only add to their losing investments" is a common mistake in the market. If the market has clearly told you that your judgment is wrong, then do not continue to add to your position without a good reason.

The old currency is not good, the new currency is better

New projects tend to have greater growth potential, while old projects may have lost their appeal. For this, you can refer to my previous detailed analysis of capital flow.

The traits of the best players in the game - David Sirlin

David Sirlin is a competitive fighting game champion who wrote a book called Playing to Win, sharing his strategies and insights. These may not be unfamiliar to anyone who has participated in high-level competitions. But the qualities he summarizes for successful players are also applicable to investors in the crypto field. These qualities include:

• Have a deep understanding of the market: Knowing historical trends and precedents can help you predict future market changes.
• Love the market: You must love this "game" before you are willing to invest enough time and energy to win.
• Mental toughness: This market will put you through countless crashes, but you need to persevere.
• The right mindset: When faced with losses or misfortunes, do you choose to face it calmly or complain angrily?
• Technical skills: Do you have unique skills or strengths?
• Adaptability: Can you flexibly apply your strengths to new environments or rules?
• Yomi (Prediction): Can you accurately predict the behavior of other market participants?
• Evaluative ability: Can you judge the value and potential of things relatively?