In the 5 years of ups and downs of the crypto world, I have summarized 6 very important mental models, in no particular order:
1) Probability — randomness reward
Do you think this opportunity is one that you will regret for the rest of your life if you miss it? Perhaps you also believe in the argument that a person only needs to grasp a few big opportunities to succeed.
This statement is true, but it also creates a certain misunderstanding: it magnifies the benefits of a single opportunity and ignores the number of times the opportunity arises – the so-called “ergodacity”.
As long as you have survived in the Crypto market for more than a year, you will surely find that there are too many opportunities in the cryptocurrency circle. Even if the last month has been so miserable, there are still several good opportunities for Brother Sun to acquire Huobi, $XEN minting, and $APTOS issuing coins.
This is a deep bear, family.
However, although there are so many opportunities in the coin circle, relatively speaking, it has too many pits, a CX disk, a rug disk, an untimely belief, will make you suffer huge losses.
So my view has always been that money is inexhaustible, but it must be lost.
If you face up to the role of probability, you will know that the opportunities are infinite, and your number of mistakes (fault tolerance) is limited.
So don’t be easy Fomo, easily go up, see it, look at it, and go up again.
Not this time, earn next time.
It’s okay, there is still a long way to go.
2) Redundancy – Surviving is the number one priority
When I experienced the random reward, I firmly believed that no matter what, as long as I stabilized, I would be able to slowly become rich.
But there is a question at this time, in case of some unexpected black swan event, such as wallet theft, exchange account hacking, etc., etc., then what should I do?
So I decided to block the downward passage.
The way to block it is to maintain a certain amount of cash reserves at all times, which can be USDT, US dollars, RMB, or even gold bars.
They won’t move easily anyway, and the storage method must be safe.
Assuming I have a 10% risk of zeroing, then closing this gap is theoretically invincible.
All that remains is a matter of time to get rich.
3) Periodic model
Can manpower prevail?
I think not.
For example, I think China’s post-70s generation is the happiest generation, they work at the age of 20, reform and opening up, all industries are waiting to be developed, and opportunities are everywhere. The two major tracks of real estate and the Internet have just started (90-00s), and housing prices have just entered commercialization, and the state encourages and supports the purchase of houses And buying a house is a natural thing, a little money to buy one more, without any psychological burden.
The post-90s generation born 20 years later is more miserable. Industrial development encountered a bottleneck, housing prices took over at a high level, and went to the 30-year-old stall to strive for strength, but found that the objective environment did not allow it.
Now is the era of involution + lying flat.
I don’t mean certain individuals, I mean whole groups, and luck really matters.
Far away, the financial market, especially the currency circle, is also a very, very obvious place for cyclicality. As the saying goes, a 4-year reincarnation, a bear market can fall 90+%, and a bull market can rise 1000+%.
It is difficult for a bear market to make a fortune, probably, the environment does not allow. Not making money in a bull market is a shame and a rookie behavior.
This is the (result) of the (market) cycle characteristics.
Undoubtedly, we are still at the bottom of the cycle, or rather in the process of finding the bottom.
Our approach should be to invest in “infrastructure”.
That’s right, our little leeks also have infrastructure, cognitive improvement, technology improvement, find small circles to cooperate, find high-quality communities to report for group heating, learn some skills, and reserve some accounts at a low level.
When these things reach a bull market, they will become levers that you will not blow up.
4) Income = investment research * technology * funds * execution
This is summarized by the partner “chad”, and I personally feel:
Funds are innate and loans are not recommended.
Implementation is personal, and some people just don’t like very bloody officers.
But investment research ability and technical ability, you always have to occupy the head.
Technology can magnify your gains and reduce your risk (eliminate bugs). If you have good technology, you can find someone with strong investment and research ability to cooperate. And vice versa.
Note that this formula is multiplication, not addition.
You should do what you do best in the value chain, and choose to cooperate for the rest.
It’s not to underestimate execution, execution is often a neglected piece, the top hair-pickers I know are the kind of people who have no funds, no technology, and no investment in research. But people can use strong execution to gain recognition and blessing from other resources.
Mixed into the small circle, it is also very moist.
Talent is talent everywhere it goes.
5) Increase = expected difference * noise (flow)
First of all, there is a misunderstanding, some people think that as long as the fundamentals are good, buying will definitely make money.
This view is clearly Too young, too simple.
The bear market has a lot of coins that have been killed by mistake, depending on why you buy up, many coins are valued according to traditional PE, which is cheaper than Hong Kong stocks.
This is a currency circle.
The current situation is that in the Internet era, the aroma of wine is also afraid of deep alleys.
Good projects are not known, and the increase is limited.
Note that I’m using multiplication.
The project is good and expensive, it is useless, and the space is limited.
What we want is that the project is good and the price is low, because some long-term or sudden benefits lead to higher and higher expectations for the future.
Therefore, the expected difference is our earnings part.
So what is the noise for?
Noise is an amplifier, someone has to take the plate, why should the person take over the plate for you, first he has to know this matter.
To spread, to noise!
6) Asymmetric returns – arbitrage
Shenyu said that the mental model that has had the greatest influence on him in the past ten years is arbitrage thinking, but I thought about it for a long time and didn’t figure out what arbitrage is.
Arbitrage does not only refer to the brick moving, deadline, rate, new or so on, which is something at the technical level, looking for asymmetric returns in a wider world.
Asymmetric benefits mean that the costs you pay/risk are far less than the expected benefits.
It is not equal, so it is called arbitrage.
The premise of arbitrage should be a broad vision and comprehensive skills, otherwise sometimes you see and don’t know that you can operate and arbitrage.
Let’s try to give a few examples:
1) CRV bribery
Last November, $MIM gained access to the huge liquidity provided by the CRV protocol through bribery of elections.
Later, I learned that in the early days of bribery, the yield was as high as 10 times, and even if you issued a fake stablecoin at random, obtained liquidity through bribery, and then sold it can easily benefit.
The difficulty here lies in understanding the mechanism of bribery and the cost of bribery.
2) USTC short after LUNA thunderstorm
This is within our reach, and small money can participate.
Do you know? In fact, many people lost money when they shorted LUNA, because the price fell from 30 to 10 yuan, down 60%, but from 1 to 7 yuan, it rose by 700%, and many people blew up their positions because of a pullback.
But short $USTC is very safe, LUNA must die, even if it is callback, USTC cannot be higher than 1 block for a long time, and the highest is 1 block.
Therefore, short USTC in 1 block must win, the whole position stud is not afraid, isn’t this a very good arbitrage opportunity?
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/walking-in-the-crypto-world-you-need-to-understand-these-6-crypto-investing-mindsets/
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