The Hitchhiker’s Guide to the Galaxy (of crypto) Part 1: Introductions

Hello there, e̵x̵i̵t̵ ̵l̵i̵q̵u̵i̵d̵i̵t̵y̵ friends.

Ah, time flies when you’re in crypto.

I can’t believe it’s been a year since I took that leap of faith from TradFi into crypto, which has completely changed my financial health (uponly), mental health (downonly) and physical health (updownupdownupdown) so much.

I thought I’ll write this medium article to guide you along with my experiences so far and that hopefully, it’ll help you out as someone looking to step into the world of DeFi.

Welcome to the world of decentralized finance.

C̶o̶l̶o̶r̶i̶z̶e̶d̶ ̶d̶e̶p̶i̶c̶t̶i̶o̶n̶ ̶o̶f̶ ̶r̶e̶t̶a̶i̶l̶ ̶g̶e̶t̶t̶i̶n̶g̶ ̶b̶u̶r̶n̶t̶ ̶b̶y̶ ̶t̶h̶e̶ ̶m̶a̶r̶k̶e̶t̶
Crypto friends enjoying a campfire together.

You open the door and step through it, endless paths branching out in front you….

So, you’ve done your KYC and on-boarding. You’ve deposited your funds, you’ve setup your metamask (try tweeting this word on twitter) and hopefully gotten a ledger, you understand basic OpSec, you understand what are gas fees, what now?

First up, chains.
What are you looking at, what chains will you be putting your funds on, how do you choose?
You’ve got your basic boomer chains like Ethereum ($ETH) and Bitcoin ($BTC). You’ve got your alternative L1 networks like Avalanche ($AVAX)and Fantom ($FTM). You’ve got your L2 networks like Arbitrum (ARB?) and Optimism (OP).

IMO, there’s only a few reasons to use alt L1s or L2s.

1. Cheaper gas fee.
2. Chasing the narrative.
3. Protocols nativity.

Gas fees used to be an issue for ETHnet during the bullrun, but has pretty much died down with the onset of the bear market due to cheaper eth prices and much lesser chain activity, leading to lower gas fees.

Narrative chasing includes understanding and attempting to front run the average retail to where you believe the next ball of money will roll to. Extremely important since IMO this is where the easiest profit multiples can be obtained, and conversely where you may lose the most money.
This usually includes a new chain launching with incentives being provided to onboard protocols, and these protocols giving out these incentives to users on that chains. Users then farm these incentives by providing liquidity (LP) or staking certain tokens. Hence, most of the time you’ll see an big onset of total value locked (TVL) to these chains as people chase the incentives. As a start to narrative chasing, understanding what are pool1/2 mechanics, IL, before attempting to do any LP farming is key.

Pool 1/2 explanation.
https://twitter.com/ChainLinkGod/status/1305748404971028480?s=20&t=PGKEnsLYWUQfkAc3Q_KkRw

What is IL
https://academy.binance.com/en/articles/impermanent-loss-explained

Other forms of narrative chasing includes airdrop farming (not always guaranteed) by doing certain stuff on-chain, in hopes you’ll be given free tokens somewhere down the road. Current examples would be Arbitrum odyssey and Optimism NFT quests.

Then you’ll also have projects-related narratives like the past ve-meta (noob trap) narrative, big projects like the launch of Solid on FTMnet by Andre Cronje which brought a lot of people onchain buying FTM native tokens to farm incentives, and sometimes both narratives coming together to give rise to huge pumps. Current narrative is projects with real yield. (tbh i think it’s a stupid narrative but hey, welcome to crypto)

Liquid Driver (LQDR), what happens when you get a VE narrative + Solid farming incentives happening together. In this case, price rose dramatically due to ve-meta and also a shitload of people buying LQDR (and also other native FTM tokens) to farm SOLID, SOLIDSEX, etc tokens to sell.

Just don’t get farmed and dumped on like a pleb lmao

Protocol nativity means you have an interest in protocols that are available only on certain chains. If you’ve reached this point, probably means you’re advanced enough to skip this primer. Defillama has been a very useful tool in checking out chains and projects nativity, amongst other services.

Random stablecoin taking from defillama. If you’re yield chasing, you’ll find this top APR on a protocol that's only on Polygon. Always remember protocol risks.

So now that you have a rough idea of the different chains and the factors involved that I personally use as a metric, how do you find the information to fit these factors to make your decision? Stay tuned for the next article on creating your own information network and hopefully finding and/or creating a community if i’m not too lazy lmao. I’ll also include a list of people on crypto twitter (CT) that I follow.

Thank you for reading part 1 of my primer series! I hope you’ve found this useful. I’d appreciate if you gave me a shoutout and follow me on twitter too.

As usual, stay safe and keep learning friends!

Ref links

https://gmx.io/?ref=Bartcheeks : Perp trading on Arbitrum
https://ref.handle.fi/bartcheeks : FOREX trading on Arbitrum