Token Evaluation & Portfolio Allocations (2 of 6)
If you came from my first article, welcome. Before we begin, some do’s and don’ts…
Don’t get caught up in fear, uncertainty, and doubt (FUD). Don’t fall prey to the fear of missing out (FOMO). Don’t shill bad coins. Don’t get rekt.
Do your own research (DYOR). Do HODL. Do diversify your bag (to a degree)
Ok enough of the slang, now to get to what I promised.
Let’s talk about how I might structure the last 10–30% of my crypto holdings if my objective was growth and to outperform in the 12 month plus (+) timeframe.
Note: The objective here is to outperform a market cap-weighted portfolio while still maintaining a reasonable risk-return profile. This is evaluated differently for each investor, but I’ll do my best to make one that is widely applicable. If you want to ape in to moonshots (high risk, high return) I would argue that you should have a separate reserve fund designed for that.
Additional note: There are other tokens I am interested in, but I am self-limiting myself to 20 picks so this doesn’t become a 30+ article series. Any other projects and protocols I am watching will be included in the ‘honorable mentions’ section for each category…
Segmentation & Evaluation Methods
For the benefit of the reader, I have segmented my allocations by the following categories:
- DeFi/dApps
- Exchange protocols
- Layer 1
- Metaverse/Gaming/DAOs
Disclaimer: These buckets are not mutually exclusive and my categorizations will likely differ from yours or your favourite crypto analysts (unless it is me). They simply serve as a methodology for organizing the investments by my approach to their analysis.
In general, I take a multivariate approach to evaluating crypto opportunities across three main categories (in no particular order):
1. Methods from traditional finance to evaluate the investment from its on-chain metrics and other statistics (fundamentals)
2. My experience in the space, analyzing crypto projects since 2015 and time spent in the trenches investing personally (anecdote, experience)
3. Leveraging my network and connections to get a leg up and take advantage of information asymmetry wherever I can
As I go through each section, you will notice flavors of all three elements in different proportions.
A Quick Aside
While I love the idea of everyone taking the time to read through all my work and taking the time to understand my rationale, it is highly likely that you you may have other, better things to do.
So, if you just want the allocations they are below.
But, I highly encourage you to take the time and understand the investment thesis behind each of my choices, especially if:
- You plan on buying any crypto in the next 12 months,
- You consider yourself a savvy investor,
- You want to gain a better understanding of how to analyze projects and perform proper analysis in the space
If any of these apply to you, you can read article #3 (released at the same time as this one), linked here for my breakdown on the first section: DeFi/dApps.
Aside Over
Now, remember, this is a growth portfolio that is designed to fit into a larger crypto portfolio. Thus, if you see a coin with a high allocation in a particular section, it does not mean that I think it is superior in all aspects, but simply that I anticipate it might outperforming on a relative basis in 2022 (ex. COMP is not worse than ALCX, despite a lower allocation — but I do see ALCX contributing to more growth/gains)
Now without further ado…
My Outperform/Growth Portfolio for 2022
Category 1: DeFi/dApps (33% of growth portfolio)
Convex (CVX)
Category allocation: 30%
Growth portfolio allocation: 9.9%
Yearn (YFI)
Category allocation: 30%
Growth portfolio allocation: 9.9%
Synthetix (SNX)
Category allocation: 15%
Growth portfolio allocation: 4.95%
Alchemix (ALCX)
Category allocation: 7.5%
Growth portfolio allocation: 2.47%
Aave (AAVE)
Category allocation: 7.5%
Growth portfolio allocation: 2.47%
Compound (COMP)
Category allocation: 5%
Growth portfolio allocation: 1.65%
MakerDAO (MKR)
Category allocation: 5%
Growth portfolio allocation: 1.65%
Honourable Mentions: Reflexer, Ribbon Finance, Alpha Finance
Category 2: Exchanges (25% of growth portfolio)
Curve (CRV)
Category allocation: 37%
Growth portfolio allocation: 9.25%
Uniswap (UNI)
Category allocation: 34%
Growth portfolio allocation: 8.5%
0x (ZRX)
Category allocation: 17%
Growth portfolio allocation: 4.25%
Effective total portfolio allocation:
Trader Joe (JOE)
Category allocation: 12%
Growth portfolio allocation: 3%
Category 3: Layer 1 (40% of growth portfolio)
Avalanche (AVAX)
Category allocation: 30%
Growth portfolio allocation: 12%
Terra (LUNA)
Category allocation: 25%
Growth portfolio allocation: 10%
Polygon (MATIC)
Category allocation: 13%
Growth portfolio allocation: 5.2%
Fantom (FTM)
Category allocation: 13%
Growth portfolio allocation: 5.2%
NEAR Protocol (NEAR)
Category allocation: 10%
Growth portfolio allocation: 4%
Solana (SOL)
Category allocation: 9%
Growth portfolio allocation: 3.6%
Category 4: Metaverse/NFTs/Gaming/DAOs (23% of growth portfolio)
Metaverse Index (MVI)
Category allocation: 90%
Growth portfolio allocation: 20.7%
Ethereum Naming Service (ENS)
Category allocation: 7%
Growth portfolio allocation: 1.61%
RARI
Category allocation: 3%
Growth portfolio allocation: 0.69%
Well, there you have it.
Again, I cannot stress the importance of not taking these picks at face value.
Please head on over to article 3 and stay tuned for articles 4–6 so that you can see what lies underneath these allocations.
Full Disclaimer: The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website’s content as such. Kiran Malik does not recommend that any cryptocurrency should be bought, sold, or held by you.
