DefiDividends.com was created as a way for me to share the Defi knowledge I have gathered in the past year. Defi is very complex and there is a steep learning curve involved. My goal with this site is to break complex topics and strategies down to the basics and simplify things.
My Area of Interest – Operating my Defi Portfolio as a Business
The area I am most interested in is the similarities between operating a crypro portfolio and a real estate portfolio. This mindset shift was huge for me and things “clicked” for me as I have a background in business and as an investor.
There are two major components of a real estate investment:
- The asset (house/building/apartment)
- The cash flow
A defi portfolio has those same two components:
The assets are the tokens you own in projects and/or stablecoins. These fluctuate in value the same way the housing market does. Over long periods of time they almost always appreciate in value.
The cash flow comes from many sources in defi. Some revenue sources include:
- yield from stablecoin farming
- fees and rewards from LP positions
- dividends paid out to token holders
You should optimize where your cash flow is being generated based on the current market conditions. Things looking bearish? Move into stables and yield farm. Bullish? LP for your fav project.
There are even some similarities between the borrowing and lending aspects between defi and real estate.
I would argue that a defi portfolio is even better than a real estate portfolio simple due to the speed at which you can operate and change directions. You don’t have to wait months to close on a new house or hope your tenants pay you at the end of each month. You can be in and out of a yield farm in seconds. You can get a new loan worth millions of dollars in seconds. The flexibility is unmatched.
Oh yeah and not to mention the returns from operating a defi portfolio blow the returns of real estate out of the water.
Optimizing for Cash Flow – The Golden Ticket?
The second mindset shift came when I realized I could generate a solid yearly salary solely from leveraging my portfolio to generate cash flow. I no longer had to rely on price appreciation of my holdings in order to make money.
This was not possible in 2017 during the last bull run. During that time the only way I was able to make money was when one of my coins started pumping and I had to hope I was able to sell in time.
I’m not a trader and I dont like to trade. Plus I’m not good at it. I’m at a huge disadvantage when trying to trade.
Lucky for me I no longer have to trade to make money in crypto thanks to defi. I can now keep the majority of my holdings in BTC/ETH, collateralize them on AAVE, borrow stabelcoins and farm for a very respectable APY. Will this strategy be able to last forever? Who knows. Probably not at these insane APYs but all I care about is it’s possible NOW. So im going to take advantage of it.
My main goal for my portfolio is cash flow, stacking BTC/ETH and risk minimization. That’s it. Everything action I take is aligned with those things. I think this is a very sustainable approach to benefiting from the asymmetric price appreciation crypto will see over the next decade.