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Increased Vigilance
- Investing even a small amount in a project can change your perspective towards it.
- With skin in the game, you become more attentive to project updates, news, and community discussions.
- This attentiveness can help you make informed decisions about whether to continue investing or to pull out.
- With a smaller stake, you're more agile and can adapt to the rapidly changing DeFi landscape.
- Whether it's a pivot due to market conditions, a new strategy you've learned, or a shift in your investment thesis, starting small gives you the flexibility to change course with ease.
Risk Diversification
- By spreading your investments across multiple asset classes, projects and categories you're essentially diversifying your risk.
- If one project/token doesn't perform as expected or faces issues, your overall portfolio won't take a significant hit.
- Diversification is a fundamental principle in investment to protect your assets.
- Starting small allows you to test various platforms, dApps, and strategies without committing significant capital.
- It's a low-stakes environment where you can make mistakes, learn from them, and iterate.
Learning Opportunity
- Starting small gives you the opportunity to learn about different DeFi protocols, governance structures, and yield strategies without exposing yourself to significant risk.
- As you gain experience, you'll develop a better understanding of which projects align with your investment goals and risk tolerance.
- By beginning with a small-scale approach, you allow yourself to focus on understanding one protocol or strategy at a time.
- As you grasp the intricacies of one, you can then move on to the next, building your knowledge base iteratively.
Emotional Preparedness
- The crypto market is known for its volatility.
- By starting small, you give yourself the chance to understand and manage the emotional highs and lows that come with market fluctuations.
- Over time, this experience can help you make more rational and less emotion-driven decisions.
- Success in small ventures instills confidence.
- As you see your strategies play out positively on a smaller scale, it gives you the assurance to scale up your investments when you're ready.
- Conversely, if things don't go as planned, the lessons learned are invaluable, and the financial setback is manageable.
Security First
- Starting small can help with financial risks, but security risks are always lurking.
- Protect yourself by using trusted wallets, verifying addresses before transactions, and staying alert for phishing attempts.
- In the DeFi world, your security is in your hands.
Other parts of DeFi Survival Handbook:
Importance of Research
Category-Based Diversification
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