With the fed taunting tapering many of their asset purchasing programs, we have seen a ubiquitous significant decline in assets, including crypto. Conseqnulty, investors find themselves asking what to do now.
TL: DR
The magic triangle of investing is a helpful framework to derive a sage investment thesis during various market cycles
In any market, one can source alpha in several dimensions. During uncertainty, the flight to quality trend indicates prioritizing low risk could be a winning strategy
in life, there is always an opportunity cost, and investing is no different. When looking at the magic triangle of investing one can seek high returns, risk, or liquidity/income but generally have to defer one of the legs. Currently, crypto as an asset class has produced quality returns with relatively low risk (I.E. Risk Return ratio compared to other assets); however, the liquidity/income associated with the asset class has been sparse at best.
As we enter this period of uncertainty and projected rising rates, investors will like to focus on income generation. Consequently, it is likely we will see a crypto winter as investors seek income over asset appreciation. As such, finding ways to source income using crypto assets will be a prudent asset allocation approach for the foreseeable future.
Below are two approaches to source income using cryto.
Staking using DeFi protocols such as Anchor and Curve Finance
Yield Farming/lending crypto
