Several major crypto companies went bankrupt in 2022, causing investors billions of dollars in losses. Fortunately, I was not a victim of any of them.
In this article, I discussed the various crypto investment policies I follow and how they helped me avoid being a victim of any of these failed projects or elaborate scams.
1. All in DeFi
As long as you maintain full custody and responsibility for the safety of your crypto assets, nobody can steal or lose them for you.
All my coins are held in self-custody (my own wallet) and I trade and invest 100% on-chain on the various DeFi platforms such as DEXes (decentralised exchanges), yield aggregators, etc.
The only time my coins enter an exchange is when I’m buying with fiat, cashing out, or converting from one chain to another.
If the platform doesn’t collapse at that brief moment that I am doing these transactions, it’s impossible for me to get trapped in their liquidity crisis.
And throughout 2022, I have been lucky not to have my money on any of the failed platforms the day and hour they paused withdrawals.
Some of my favourite DeFi platforms for trading and investing in passive income opportunities are Biswap and Beefy. Check them out.
2. Invests selectively
If you cannot confidently explain where the rewards you’re earning on a platform are coming from, don’t put your money on it.
Furthermore, if it looks and feels like a Ponzi scheme, it’s safe to assume that it is until you do your own research (DYOR) and prove it otherwise.
For example, the 20% APR on the TerraUSD (UST) stablecoin staking program was a clear signal that the reward is unsustainable and destined to collapse.
And that’s one thing that kept me from investing in it until it finally collapsed.
The same applies to some of the centralised lending platforms. They can’t be making so much profit consistently to guarantee the high rewards they pay out.
So, where do you think the extra money is coming from? Your guess is as good as mine —other users’ deposits or relying on the market to continue going up, which is unrealistic and naive.
3. Follow my gut
I had an unverified account with FTX for more than a year but never funded it for trading because something just didn’t sit well with me about the exchange.
The only time my money went through FTX is when I had to move some funds to Arbitrum and the exchange was the most reasonable option available to me at the time.
Except it collapsed at that very moment of moving my funds in one way, and out another, I couldn’t have been affected by its insolvency.
If it doesn’t feel right to keep your money there, then don’t. It’s that simple. There’s a reason your gut is telling what it’s telling you.
Your job is to clear every doubt you’re having before proceeding with your money.
Does that mean I made a profit in 2022?
Far from it! I made a ton of unrealised due to a significant decrease in the price of the various crypto assets I am holding.
All the shenanigans that happened in crypto in 2022 contributed to exacerbating and prolonging the bear market which nobody can hide from.
Conclusion
I’m not some crypto guru with all the answers but the above simple and common-sense investing principles have worked for me. And I think you can pick one or two things from them for yourself.
Were you as “lucky” as I am during all of the 2022 brouhahas? And if you fell victim to one or more of these failed projects, what lessons did you learn? Share with us in the comments section below.