I am very optimistic about the long-term investment value of DeFi. But I also want to emphasize that this field may not be suitable for all investors, especially for novice investors.

1. Investors with too little capital are not suitable for participating in DeFi .

There are two main ways for investors to participate in DeFi, one is to participate in mining, and the other is to directly buy project tokens in the secondary market.

Let's look at mining first.

Participating in mining is the safest way, because it only requires users to mortgage tokens, such as providing liquidity, such as normal trading transactions, etc., to get rewards of project tokens.

Let's look at buying directly in the secondary market.

This is a relatively risky gameplay, especially at the moment when all kinds of new and old projects are flooded, even causing some mixed situations. In this situation, investors cannot be desperate to buy only 1 coin or 2 coins. In order to diversify risks, they must buy at least 4 to 5 varieties. And for each variety, you have to invest more than $1,000 to get a tangible benefit. Therefore, the principal would have to be more than 4000 or 5000 dollars.

Therefore, I do not recommend participating in DeFi projects for investors with a capital of less than US$5,000 or limited risk tolerance. So what do these investors do not participate in DeFi? Choose Bitcoin and Ethereum investments with the most controllable risks.

2. If the two assets of Bitcoin and Ethereum account for less than 50% of their total allocation, do not participate in DeFi

Through the above sharing, we will find that investors participating in DeFi have certain costs and risks. To balance this cost and risk, investors must carefully allocate assets.

I wrote about this in a previous article. I suggest that Bitcoin and Ethereum together account for 70% or even 80% of investors' digital currency investment. Without these two stable assets as ballast stones, if we risk participating in DeFi, the risk would be too high.

Let's take an example

If an investor’s initial capital is 40,000, he has invested in Bitcoin and Ethereum through these years, and his assets have increased by 3.5 times so far, then his existing assets are 140,000. So he can now keep 70% (100,000) of them in place, and use the remaining 40,000 to participate in various DeFi projects.

With this configuration, even if he loses 40,000, he still has 100,000, which is 2.5 times more than his original investment of 40,000, so he can fully bear the risk of losing money.

Therefore, without the guarantee of 70% of stable assets, he cannot participate in DeFi with peace of mind. This is the importance of Bitcoin and Ethereum in asset allocation .

This capital can not only ensure the steady growth of our assets, but also ensure that we have a certain amount of funds to participate in high-risk opportunities in various markets.