Recommended to bookmark: The Ultimate Guide and Wisdom of the Crypto Circle | Reconstructing Risk Awareness, Navigating Multiple Opportunities, a Comprehensive Interpretation from Risk Management to Role Selection—

Recently, @izebel_eth's content has gone viral in both domestic and international crypto circles.

The summary of the content is excellent, with detailed interpretations from the choice of roles in entering the market, to gameplay choices, to capital allocation;

It is reminiscent of the operational manual by Shen Yu from years ago, and I suggest that both veterans and newcomers should take the time to read it carefully:

Here is the core summary (with some of my personal insights added)

1️⃣ About Risk: We need to reconstruct risk awareness in the crypto circle—

The biggest risk in investing is not that you don’t know, but rather the quadrant of “you don’t know what you don’t know.”

Traditional finance (tradfi) has decades of experience and regulatory bodies that can minimize this danger, while cryptocurrency is relatively wild and still a surprisingly small stage (lacking regulation and evolving rapidly), but this also creates an unequal competitive environment where you cannot know where the risks lie. Therefore, in the crypto circle, all our risk awareness needs to be reconstructed!

2️⃣ Multiple Opportunities in the Crypto Circle—

Although the risks in the crypto circle are enormous, the good news is that everything is right there; if you understand the risks, continuing forward reveals a beautiful landscape—

High Return Potential: The cryptocurrency market is known for its high volatility, which means investors have the opportunity to achieve high returns in a short period.

Low Barriers to Entry: Compared to traditional investment markets (like stocks or real estate), the barriers to entering the cryptocurrency market are relatively low.

Innovation and Technology-Driven: Cryptocurrencies are based on blockchain technology, which has the potential to disrupt the existing financial system. Those participating in the cryptocurrency market are not just investing; they are also engaging in the application and development of new technologies, providing them with opportunities to participate in the early innovation economy.

Global Market: Cryptocurrencies are essentially decentralized and have no geographical restrictions, meaning investors can participate in the global market, avoiding the opportunity loss caused by regional limitations.

Economic Independence: For many, cryptocurrencies offer a way to increase wealth without relying on traditional banking systems, especially in economically unstable countries or regions, where cryptocurrencies may provide a tool to combat inflation and currency devaluation.

3️⃣ The Importance of Teamwork—

Emphasizing the importance of teamwork in cryptocurrency investment.

It is advisable to find a group of resilient, ethical, and hardworking companions rather than going it alone, as market feedback is often delayed, and a team can provide timely feedback.

This industry is evolving too quickly for one person to learn all the knowledge systems; a team can be your mutual support, your extensions, and your reach;

4️⃣ Choosing the Right Role—

To achieve long-term success in this field, one must develop their true advantages, simply put, find what you are best at:

Buying coins that rise during a bull market is not a true advantage—recognizing bullish conditions is the real advantage. Sitting in a group chat listening to others explain things is a real advantage, but it often fades quickly.

Different strategies suit different personalities; players who are patient and risk-averse should not enter http://pump.fun to speculate on memes, while those who love memes may not spend long researching Fram and DeFi deposits.

Continuing to earn in a professional field is the true advantage. We need to find our personality strengths and derive from them—

The article categorizes investors into different types, such as Traders (DPS), Long-term Holders (Tank), and other supporting roles, each suited to different risk preferences and strategies.

1) Traders (DPS):

The author defines DPS as classified by different types of directional trading styles, all of which can provide high returns under high risk;

To play the role of DPS, one must have a strong risk tolerance, robust risk management, psychological resilience, and energy in the face of failure.

Personally, I feel that I am not suited for this role.

A. Short-term Traders (Trench Warriors):

Shitcoin traders are the most versatile among all categories— the worst (and average) are very bad, while the best are very good; outstanding players fully utilize the available information set to help them gain wealth. If you consider yourself a “shitcoin trader” and do not conduct your own on-chain analysis, then you have room for improvement. In my view, this is the only true alpha in this category.

Although it has become a popular starting category due to low capital requirements and high potential upside, the shitcoin and meme player styles cannot scale to higher levels. The problem lies in liquidity—newly issued coins often have poor liquidity, and attempting to trade on a larger scale means more slippage. In fact, buying too much of a coin's supply often stifles it—because people take on correspondingly larger distribution responsibilities. Due to the high failure rate, junk coins cannot scale well with increased trading volume.

B. Good New Thing Hunter:

Essentially, I belong to this category; my direction for wealth acquisition since entering the market has also been through this method: seeking Alpha and heavily investing!

New Thing Hunter, a cool-sounding name, means finding fresh things that can lead the narrative of this bull market, identifying a new token with a strong fundamental argument early on, and then riding the wave to profit early.

Unlike shitcoin players, meme players have holding periods of days or even hours, while we Alpha seekers may take weeks to months for our basic narratives to form, even if ideally the market agrees. This is the style I prefer and believe is the most repeatable without relying on “luck.” For “good new things,” the ideal range is to buy around a market cap of 50 million to 1 billion and exit around 1 billion, meaning this strategy can scale up without issues.

Why seek new narratives?

Because the core argument is “in a developing bull market, the market is not pricing correctly; it should be worth more.” New things can do this more easily than old things for two reasons:

Time— the market does not have enough time to price correctly;

Liquidity— the existing holders available for sale decrease while the number of observing buyers increases;

It doesn’t necessarily have to be a new token—conversions of old tokens can also work, though the resistance may be slightly greater due to existing supply.

How to find good things? The best answer is “you’ll know it when you see it,” like when you see a concept or logic that excites you.

These feelings do not come overnight or by luck; they evolve from your long-accumulated experience and project analysis ability. If you don’t know what to look for and don’t have these abilities, here is my starting checklist:

Is it new?

This is the most important point. First movers can gain more momentum than you expect and have very high upside risk/reward. New metadata brings new opportunities to discuss this industry, and all attention returns to the original place.

Does it have a flywheel?

Junk coins have a natural flywheel— as their prices rise, holders become wealthier and more excited, telling more friends, and so on. Other flywheels are more complex. Combining curves can often be a wonderful flywheel in itself, as you can determine and secure guaranteed payouts in advance, guiding activity.

Is there entry resistance during the rise?

Entry resistance (the internal struggle when buying) actually provides opportunities for your entry and the development of investment logic. If there is no entry resistance at all, why would you be so lucky to buy in at a low price? Perhaps this indicates that its pricing is already reasonable. Of course, this also assumes that these entry resistances can be gradually reduced— for example, Rollbit migrating from Solana to Ethereum, the development of the Hyperliquid spot ecosystem, or even the launch of Bitcoin ETFs. The reduction of resistance will allow more funds to flow in, benefiting those who made early efforts.

2) Intuitive Investors (Meme Priest)

It is worth considering that, from a macro perspective, Bitcoin is essentially a huge meme coin. When I look back at my investment experience, I find that if I had just “blacked out” after each purchase of a meme coin, my returns would far exceed most “active investments.” I’m curious if you have had similar experiences— perhaps this is a lesson worth contemplating and learning from.

These roles require high risk tolerance and psychological resilience.

3) Leverage Wizard:

The highest risk category is the “Leverage Wizard,” who is often difficult to distinguish from “problem gamblers.” Based on experience, most traders’ problems stem from using excessively high leverage, holding losing positions for too long, and overtrading. I used to joke, “There are no truly successful leveraged traders—only those who haven’t been liquidated yet.”

Leverage trading can deceive you because there are a few times each year when it seems exceptionally easy to make money— such as when a Bitcoin ETF is approved or Trump is elected. But aside from that, the world of leverage trading is a brutal PVP battlefield. Even when profits are made, the returns from leverage trading often do not compare to simple, asymmetric spot investments.

I strongly advise against choosing this path.

4) Long-term Holders (Tank):

This strategy is nearly flawless (except for smart contract risks); “Tanks” incur very few losses in trading, but their potential gains are also significantly limited. Choosing the “Tank” strategy is very suitable for those who are extremely patient, risk-averse, or distracted by other matters; additionally, players with a certain amount of capital generally end up embracing this strategy.

Because if you already have wealth above A9, your greatest effort should be focused on how to protect your assets and avoid problems.

A. Stablecoin Farmers:

Providing liquidity for users or projects is a very profitable job. Overall, stable sources of income usually consist of the following types, each or a combination of which forms the basis of most stable “mining” opportunities:

Funding Rate Arbitrage

When Bitcoin is at an all-time high (as is the case at the time of writing this article), the market demand for margin trading surges. This drives the “funding rate”—the annualized interest rate that longs pay to shorts— to extremely high levels. In major coins (like Bitcoin, Ethereum, and Solana), this rate often exceeds 20%.

The impact of high funding rates is not limited to the on-chain stablecoin market (like USDT) but also permeates lending markets like Aave.

Real-World Asset (RWA) Yields

Government bonds are the most common and liquid type of real asset, successfully bridging the gap with the crypto world. I recommend avoiding involvement in real estate and most other real asset yields, as these assets have low liquidity and carry high adverse selection risks.

Incentive Token Yields

Attracting liquidity by issuing tokens to users providing capital was the main driving force behind the DeFi summer explosion. Nowadays, due to the addition of points programs, returns have become less predictable, but even points programs can bring unexpected upside. This method is purely PVE (player versus environment), as project parties are willing to exchange their minted tokens for available liquidity.

Market Making Liquidity Providers

Although it doesn't completely belong to any of the above categories, "Market Making Liquidity Providers" is a new model that has emerged in this cycle, with returns that, while unstable, are high enough to warrant attention.

The GMX liquidity pool is the first major implementation, followed by Jupiter and Hyperliquid. I believe both JLP and HLP are excellent vehicles for capital storage, as most leveraged traders perform very poorly.

Leverage stable yield mining is not recommended.

Overall, I do not recommend participating in leveraged stable yield mining—there are simply too many potential issues in this scenario.

B. New-style Yield Farmers (Sybil/Wash Farmers)

For many newcomers in the crypto space, this strategy is undoubtedly the option with the highest risk/reward ratio, as it typically requires very little capital investment. The core idea is to participate in a new protocol (for example, as a user, contributing trading volume, etc.) to ensure that expected returns exceed costs.

However, this approach is gradually losing its effectiveness, as more and more projects have become aware of the exploitative nature of these farmers and have begun to implement linearly designed reward mechanisms.

The essence of this farming method is a tacit understanding—projects need metrics (such as user numbers, locked amounts, trading volumes) to support valuations and attract new users. Unlike stable yield farmers, the only thing Sybil/wash traders provide is an illusion. Nevertheless, many projects are still willing to pay (with their own minted tokens) for attractive Dune Dashboard data.

To my knowledge, most serious operations are programmatic, constantly battling detection mechanisms. After hearing someone casually mention they have a zkSync bot farm with 12,000 accounts, I decided to never touch zkSync again.

A practical implementation method is—when interacting with a great new thing, use multiple accounts that you would actually use organically. By the way, I have some extra Hypurr NFTs; if anyone wants to trade off-market, feel free to reach out.

Suitable for more patient and risk-averse investors.

5️⃣ Investment Strategies for Capital Accumulation:

Capital Accumulation:

1) Low Capital Stage (below four digits): It is recommended to first earn fiat currency through traditional work;

2) Five-Digit Stage: Focus on increasing fiat currency, suggested to achieve this by holding quality new projects or MEME coins.

3) Six-Digit Stage: Look for opportunities for 10x growth, emphasizing monitoring new projects and holding beliefs.

4) Seven-Digit Stage: Strategies are similar, but investment scale and liquidity need to be considered; it is recommended to start participating in private placements.

5) Eight-Digit and Above: Emphasize maintaining caution and avoiding major mistakes.

Avoid Common Mistakes:

1) Avoid trading when feeling down (Tilt Trading).

2) Avoid blindly investing after winning big (Euphoria Trades).

3) Avoid buying and selling repeatedly due to market sentiment (Roundtripping).

4) Do not focus too much on unrealized profits or past highs (UPNL/Old ATH).

5) Be cautious about so-called insider information (Insider Information).

Regarding this part, you can also refer to @bitfish1's "Shen Yu's Beginner Advice: What You Need to Get Right in the Crypto Market from $1,000 to $100 Million," as both share similar thoughts:

1) Under $100,000: Learn more, take more action.

• Brush up on core DeFi project airdrops;

• Mint whitelist for popular NFT projects;

• This stage requires spending a lot of time gathering information, analyzing, and judging potential projects; execution must be strong, and persistence in yield farming is essential.

2) $100,000 - $1,000,000

• Do not leverage trade coins, do not play contracts;

• On new public chains and L2s, find potential projects according to the time machine principle, acquiring chips at low prices;

• Find your tenfold coin.

3) $1,000,000 - $10,000,000

• Choose your coin base, such as BTC or ETH, and study deeply;

• Trade appropriately, do not short, do not short, do not short!

• Flexibly use low-leverage DeFi lending protocols to improve capital utilization; platforms like dydx can be used to trade while also earning token rewards.

• Observe more, arbitrage more, stick to coin-based growth;

• Do not be greedy to participate in every hot spot, earn every penny; obtain stable cash flow through arbitrage staking, etc.;

• Maintain a stable mindset, remain indifferent; whether wealth levels can break through is left to time and industry development.

4) $10,000,000 - $100,000,000

• Once assets exceed a small target, improve the lives of family members, read more, exercise more, and change personal cognition and social circles;

• Hold core assets without stepping into major pitfalls, pursue low-risk stable appreciation and good cash flow;

• Do not play contracts, do not start a business, and be cautious to avoid pitfalls;

• Maintain a certain amount of coin-based assets to avoid missing out;

• Maintain a certain amount of stablecoin assets to obtain stable cash flow. This also prepares for unexpected situations in life, allowing for buying the dip during market crashes;

• Invest 10-15% of assets in sectors you are optimistic about, keeping yourself engaged while also preventing impulsive actions.

Finally, to summarize the traits of successful players:

Quoting David Sirlin's perspective:

Successful investors need to have a deep understanding of the market, a passion for the field, strong psychological resilience, a correct attitude towards winning and losing, strong technical skills, adaptability, the ability to predict others' behavior, and the ability to correctly assess opportunities.

Through sharing these strategies and mindsets, the article aims to help readers find their positioning and strategies in the uncertain cryptocurrency market, avoid common mistakes, and thus enhance the probability of investment success.

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