How to avoid getting Rekt

Published in

BamBamDao

3 min readSep 30, 2021

This past summer, I had the chance to work with three MBA colleagues, including Kevin Mathews, on a DeFi Capstone project. Like Kevin mentioned, the journey through DeFi is challenging to say the least.

What is DeFi?

DeFi is the ability for crypto-asset holders to borrow and lend, just like in traditional banking. What do you do when you get your paycheck? Unless you deposit it under your mattress (shout out to my grandpa), you deposit the check into a bank account. The principle earns interest overtime paid by the bank. The bank then invests that capital into funds and looks to make a profit. DeFi follows a similar model; however, there is no central bank or local credit union. Instead, there are DeFi dApps which connect lenders and borrowers. dApps are decentralized in nature, and there are pools (Automated Money Makers) where lenders can place crypto-assets and receive interest, while borrowers can put collateral to borrow those crypto-assets. Pools operate based on pre-determined formulas. The most common is the Constant Product Formula (X*Y=K). But let’s not get too technical just yet.

Why do people participate in DeFi? Yield, yield, yield. How much did you earn the last time you deposited your money in a bank? Maybe .02%? DeFi offers the ability to make attractive gains of 10%,15%, 50%, and even 100%. But it’s not easy. As Kevin talked last week, it’s more common for an average Joe to lose everything (aka Rekt) instead of making gains. Our group learned the hard way. On our journey, we watched a ton of youtube channels, read books, followed too many handles to count, and listened to a ton of podcasts. We found some great resources and some pretty terrible ones as well. The number of folks talking from their parents basement but telling you they made millions is incredible. Either 1.) they are lying or 2.) they must have some serious attachment issues to that stained couch.

Okay, now what?

If you are interested in this space and want to learn more, check out some of our favorite resources. There is much noise out there with so many actors having hidden intentions. But first, you need to treat this as an investment. If you want to understand this exciting world, you need to spend the time. How many times have you heard something like this:

What token should I buy? I want to make 5x my money! My friend’s older cousin’s best friend’s college roommate’s brother made like $1M.

We found these resources (in order by category) to be the most helpful. Spend the time to go through each before jumping into it…unless you do want to end up in your parents basement on a stained couch broke…

Best DeFi Educational Resources:

Build a Foundation:
• Lesson 1: Download and read Satoshi Nakamoto’s bitcoin white paper. This started the entire industry: https://bitcoin.org/bitcoin.pdf . For extra credit, download Digital Gold to read.

• Lesson 2: Check out Finematics videos. Start with the DeFi playlist. There is about 40 videos and will take about 12 hours: https://www.youtube.com/channel/UCh1ob28ceGdqohUnR7vBACA

Lesson 3: Read “How to DeFi” (beginner and advanced). These are quick reads and give a great overview of the industry.https://landing.coingecko.com/how-to-defi/

Follow the right people:

Mira Christanto: @asiahodl
Kerman Kohli: @kermankohli
CryptoCobain: @CryptoCobain
Sid Coelho: @sid_coelho
Eric.eth: @econoar
Camila Russo: @CamiRusso
ETH News: @WeekInEthNews
Hugh Karp: @HughKarp
Andreas Antonopoulos: @aantonop
Nathaniel Popper: @nathanielpopper
Frank Chaparro: @fintechfrank
Roger Ver: @rogerkver
Ran Neuner: @crytomanran

Join Communities:

Stay Current with Macro Events:

coindesk: https://www.coindesk.com
coindesk CRYPTO Podcast (Daily): https://www.coindesk.com/podcasts/coindesk-podcast-network
The Defiant: https://thedefiant.io
Bankless: https://shows.banklesshq.com
DeFi Pulse: https://defipulse.com
Rekkt: https://rekt.news
Messari: :https://messari.io

How to avoid getting Rekt

Written by Chris Powers