It’s been three months since my last post, and this feels like the classic “cooling off” phase that hits a crypto newcomer after their initial wave of enthusiasm (especially when starting from scratch). And yes - to a certain extent, that’s exactly what it is. But more than just losing momentum, I’m starting to grasp what it means to really understand something. And more importantly - what it means to actually need it. In the DeFi world, that’s starting to feel like solid ground under my feet.
The deeper I tried to dive into DeFi (mainly through watching various videos), the more overwhelmed I became by the sheer number of instruments and use cases - not just in quantity, but in how scattered and siloed everything feels. We collateralize with stables, borrow ETH against it, stake it via Lido, receive stETH, then re-collateralize it in Aave and borrow again… maybe this is all “transparent enough” to a trained eye. But to me? Not really.
What’s tricky is figuring out exactly what I’m missing when I listen to these strategies and tactics for generating good DeFi yields. It constantly feels like there’s a missing layer — some basic foundation I don’t yet have. Not just technical knowledge, but a kind of mental model: why do this and not that? There’s money involved, there are assets being moved around - surely there are tradeoffs worth understanding beyond “this APR is higher right now.”
Take this chart for example — looks simple enough, doesn’t it?
At one point I started wondering: maybe I should read a serious book “on the topic.” (Or several - let’s be honest.) I think - someone has to write these things, someone has to edit and publish them, and there are enough books on finance out there already. By chance I ended up with The Most Important Thing by Howard Marks - and as of now, I’ve read four chapters covering ideas like:
Mixed feelings. My first reaction was:
“This entire framework feels weirdly inapplicable to DeFi and crypto in their current form.”
Traditional markets and assets have entire ecosystems of metrics and indicators tied to the “real economy” and real industries. Metrics we can use to understand value, efficiency, and - ultimately - apply second-level thinking.
But what do we have in crypto? A Bitcoin that’s “been trending up for a while” (because reasons), an Ethereum that’s “probably also a good long-term bet”, and then… a pile of complex strategies involving leverage and staking, all built on yield from liquidity pools or something. Isn’t that a different activity altogether? More like some operational than investing - at least in the framework that The Most Important Thing describes?
That was my gut feeling about four days ago. But the more I sit with it, the more I realize how important it is not to overcommit to hot takes - even our own. Especially our own.
The instruments described in Marks’ book may not map directly onto the crypto space today, but that doesn’t mean the thinking is useless. Maybe it just takes a different shape here. Maybe it’s not about applying that framework as-is - but about learning to translate it.
So my current position is: keep reading, but don’t expect some big universal insight to jump out right away. Maybe, with more time in the trenches of DeFi, I’ll start to see how these concepts evolve - and what kind of decisions they help shape in practice.