The 5 Key Principles for Crypto Investing

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By Max
Estimated reading: 6mins

Time has proven that crypto investing is the real deal. But due to it’s volatility, you need to have strong princples for crypto investing.

Blockchain tech has gone a long way since Bitcoin and Ethereum. Almost every day, there are brilliant projects that come up to solve real-world problems. That also means they’re harder to find among the 1000s of tokens.

Sure, you can make good returns from blue-chip cryptocurrencies. But when it comes to product-market fit, the best projects might not even show on the Top 100 list yet. That’s where crypto investing can be life-changing.

How do you find them before they take off?

1. Buy Assets with Product Market Fit

Volatility can make crypto investing difficult. If your project doesn’t have enough liquidity, any minor news can spike the price. For example, during a Bitcoin rally, it looks like all coins have demand.

Are they valuable? People might want to buy them. But does that mean those projects are needed in the market?

Is it solving a problem that enough people care about? Are there other cryptocurrencies solving it already? And if yours is somehow better, is it significant enough to justify switching to yours?

One of the most important principles for crypto investing is product-market fit. A blockchain solution for a specific crypto market. Ideally with increasing demand and high entry barrier to stand against newer competitors.

As long as there’s product-market fit, token prices tend to rise. In theory, forever. So as a long-term investor, your best strategy will be to buy long rather than to sell-short cryptocurrencies.

As pioneers, both Bitcoin and Ethereum had product-market fit. But today’s market has changed a lot since 2015. Their solutions still have demand, but many projects do it better, Pulsechain among them.

We’ve also seen these giants don’t scale very well. More users only make Ethereum slower and more expensive. ETH 2.0. may ease the situation, but it’s nowhere close to ideal.

Examples of Assets With Product Market Fit

So what does product-market fit look like?

A blockchain like Ethereum but scalable, faster, cheaper, sustainable, and inflation-proof. Pulsechain not only achieves that but also solves the demand problem. ETH users can migrate tokens and apps without losing the large Ethereum market.

Similarly, LiquidLoans has product-market fit as a true defi protocol. Many offer 0% interest fees and low collateral, but users still pay high fees because they build on Ethereum. Not only LiquidLoans is built for Pulsechain specifically, but you can earn without ever selling Pulse.

2. Long Term Holding of Assets with Product Market Fit

When investing in projects with sky-high potential, you never know when they will take off. You might be holding for months and take profits, only to see the price go 100X higher from your exit point. A coin with product-market fit has limited downside risk, so what’s the rush to sell?

If your project meets our five principles, holding will only reduce your investment risk. Holding is the reason you can (hopefully not) buy near the top, sell near the bottom, and still profit.

Even if you literally never sell, DeFi allows you to earn well beyond your initial investment.

3. Earn Passive Income while Holding

Since DeFi, hold-and-hope has evolved into hold-and-earn. You no longer need an exit strategy to profit. Your holdings can generate passive income in a sustainable, deflationary blockchain like Pulsechain.

If nobody needs to sell, the token will have a stable floor price and higher surge potential. There are three ways to earn:

  • Staking: Help secure a proof-of-stake network by “locking” tokens for a fixed period. In return, you can earn and compound variable interest daily. For a lower interest rate, it’s possible to unstake without lock periods.
  • Liquidity Pools: Earn liquidity-pool tokens and fees by lending token pairs to platforms like Uniswap. You can minimize risk on protocol-owned liquidity pools like OlympusDAO.
  • Lending: Earn fixed interest for lending your tokens without lock periods. Or maximize your yield by borrowing to lend. LiquidLoans 0% interest rates and no repayment schedule for a 110% collateral.

4. Secure your Digital Assets

While blockchain is about decentralization, the way you store your coins can still be centralized. Ironically, this invalidates even the principles for crypto investing. Imagine holding for years only to get your account lost, stolen, or hacked.

What should you do?

  • Don’t trust exchanges. Exchanges make decisions based on users, business goals, and regulations. They control your wallet access, and because they can change service terms anytime, you risk losing your account. Exchanges are also cyber attack targets and there are no full-refund guarantees.
  • Use private-key wallets. To access these wallets from a different device, you need to download an app and enter either a long character string or a seed phrase. Web3 wallets have better features and fees while offline wallets are safer. Since scammers can still steal online wallets, it’s recommended to have more than one.
  • Consider hardware wallets. Hardware wallets like Ledger or Trezor are private-key wallets with a physical security layer. The only way to access is to connect your devices via USB/Bluetooth and enter a PIN.

Security not only protects your assets but also the token’s price. For privacy projects, it’s the selling point.

5. Engage with the Community

Many amazing projects are possible because of the communities that built them. People who understood the problem, tried other options, and together came up with a better one. A cryptocurrency with more utility, efficiency, and fairness.

A fast-growing community is a fast-growing project. If you want to research in-depth before investing, that’s where you’ll find the latest information: Social Media, DAO discussions, Discords, etc.

Zero-Guesswork Crypto Investing

There’s a lot of uncertainty and speculation when trading. But the principles for crypto investing are systematic. Buy projects with product-market fit, hold, earn passive income, secure your assets, and engage with the community not to miss anything. When you take out all complex variables from short-term trading, all you need to do is follow these five principles.

The Bottom Line

The Liquid Loans protocol has all of the tenets of a successful DeFi protocol:

  • Product Market Fit: Satisfies a key necessity for PLS tokens (extracting value without selling)
  • Product Market Fit: Creates a Utility Token which provides access to the fees of the protocol when staked
  • Product Market Fit: Built on a new blockchain with its own PMF
  • Holding: There is no need to ever sell since you can yield on your tokens
  • Security: Our community stresses security and our protocol seamlessly supports hardware wallets and security apps like Trezor, Ledger, and Gnosis Safe. 
  • Community: Liquid Loans has one of the best communities in crypto in terms of professionalism and availability. 

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Disclaimer:Please note that nothing on this website constitutes financial advice. Whilst every effort has been made to ensure that the information provided on this website is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we strongly recommend you consult a qualified professional who should take into account your specific investment objectives, financial situation and individual needs.

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Max is a European based crypto specialist, marketer, and all-around writer. He brings an original and practical approach for timeless blockchain knowledge such as: in-depth guides on crypto 101, blockchain analysis, dApp reviews, and DeFi risk management. Max also wrote for news outlets, saas entrepreneurs, crypto exchanges, fintech B2B agencies, Metaverse game studios, trading coaches, and Web3 leaders like Enjin.

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