Crypto portfolio update

Exposure: 17.0%

Net return: 540.9%

Comments: In the previous newsletter I warned about buying new lowcap tokens at this stage of the bear cycle:

On Twitter, I've also warned about blindly listening to influencers who shill them:

And lo and behold... just three days ago we saw an influencer (with 230k followers) extol the virtues of one such token:

And literally an hour later, this happens:

Look, I'm not saying all influencers who shill have malicious intent.

But you need to recognize we're in an environment where:

• Many weak projects (especially copycats) are being launched
• Many big-time influencers have a strong incentive to shill these projects without due diligence or accountability
• Most people in crypto are bored and are looking for excitement
• Market liquidity is at record lows

This is a deadly combination that dramatically increases the chance of getting rugged.

So I hope my warning has helped some of you avoid such a fate.

If you absolutely must allocate some capital, consider only quality projects that have stood the test of time... not projects launched two weeks ago.

Or, even better yet: just stick to BTC, ETH and stables.

Current allocation:

 Friend.tech

The "in" thing over the past couple of weeks has undoubtedly been friend.tech. It's the latest social app that has taken the crypto industry by storm.

In case you're unfamiliar, here's the TLDR:

• It runs on Base chain (on Optimism)
• On the app, you can buy other people's "keys" that gives you access to their private chat room
• The more a person's keys are bought, the more the price of their key goes up (and vice versa) on a steep bonding curve
• Transaction fees are 10%, with half going to the devs and half going to the person the key is based on
• Many people are actively buying and selling (i.e. speculating on) these keys right now
• A token airdrop has been announced for key holders
• There's a strong (3,3) mindset among holders (i.e. "let's all keep holding and get rich together")
• Big-name CT personalities such as Cobie and Hsaka have already joined

Current incentives strongly encourage people to hold keys in anticipation of the airdrop, which is expected to be similar to Blur's first airdrop event (which paid out a lot).

And given the friction of bridging out of Base chain, plus with few other decent projects worth investing in (on Base chain), it's likely that most of the capital currently in friend.tech won't be leaving any time soon... unless something bad happens.

With that said, here are my summarized thoughts:

Finally, a word of warning: Friend.tech is structured in a ponzi-like manner, ensuring that the vast majority of key holders would be sitting on large paper profits at the same time.

But this is an illusion because only a minority would be able to realize those profits, especially with the 10% fee that rapidly erodes ecosystem TVL.

In other words, there will come a day when many will suddenly wake up to large losses as the value of their keys plummet drastically. This is essentially a game of musical chairs that's baked into the system.

So, a suggestion: If you're sitting on large unrealized gains, consider withdrawing your initial capital asap. While the music can go on for a while longer, nobody knows exactly when it will stop... and when it does, things will get ugly.

In the meantime, enjoy the journey. I missed getting on this train early, but congrats to everyone who did.

Admin update

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 Pachelbel's Canon rock

17 years ago, this legend posted the best Pachelbel's Canon cover ever:

And just a few days ago... he posted an update.

Enjoy!

 Quote of the week

Enthusiasm is common. Endurance is rare.

- Angela Duckworth

Thanks for reading, and have a great weekend.

Cheers,
Slowmad

P.S. If you have any questions or feedback, let me know at: chris[at]digitalslowmad[dot]com