Why do we need to talk to traders? Because the most effective way to build a trading strategy is to learn from people who have achieved results in the cycle. This issue's guest: Jason, independent researcher (Twitter@jason_chen998)
FC:
Let me first talk about why I wanted to invite Jason to Twitter Space to chat. We have communicated a lot in private. I think as a KOL, you have a lot of different ideas and logics about transactions. I want to start with a lighthearted question, which is how did you come up with the idea of becoming a KOL?
Jason:
At least for me personally, it was a coincidence. At the beginning, I didn't think about becoming a KOL, because I started to write for a public account. At that time, my public account was called "Today I Understand the World a Little Better". In fact, it was like my own study notes, which urged me to write an official account every day to understand the world a little more every day. Sometimes after writing, I would share it with friends and discuss with each other to see if there were any new ideas or mistakes. Then slowly, by chance, maybe I wrote more and more or something, it spread out, and then one or two articles became popular. I didn't realize that I might be a KOL at the time. I just thought I was a writer, and then I got to know more friends through this way.
Later, because WeChat public accounts banned Crypto content very severely, many of my articles could not be published, so I switched to Twitter. From that time on, I slowly got a feel for it and began to have some concrete understanding of the three letters KOL. I felt that I had reached a critical point. At the beginning, I just wanted to do one-way output. One-way output means having a desire to share. On the other hand, I hope to get feedback. I hope that after I finish writing something, people who are better than me will think that what I wrote is rubbish and criticize me, or give me some suggestions to let me know where I am wrong. In this way, I can get some feedback on external communication.
Then I slowly reached a point where I can’t remember how many followers I had, maybe 30,000. Suddenly, I had less or less feedback from the outside world, and it gradually became other people’s feedback, which might even affect other people’s judgments, and even one article might affect the change of a certain currency. At this time, I began to feel the three words KOL, which means Key Opinion Leader, which is called influencer overseas. It means you start to influence some people and things. At this stage, I felt KOL, but when I started from 0 to 30,000 followers, I really didn’t think about what to say. I just wanted to be a KOL because I didn’t have a big idea about it at the time. But when I gradually started to have some influence, I suddenly found that I seemed to have become a KOL.
Of course, at this stage, it has both advantages and disadvantages. The disadvantage is that you are more exposed to the field of vision, and more people will criticize you, because you cannot expect everyone to like you, and your content will harm the interests of others. For example, if you say that a project is not good, then all the believers of the entire project will besiege me, and then send me private messages every day to curse my mother and my ancestors. If you write a good project, once the price of this project is very depressed or falls, then others may also ask whether you have any benefits for this project, and you take the opportunity to help the project party ship. So when it comes to such a level, the effect of writing articles to improve yourself and get some positive feedback is completely gone. Instead, some of the feedback you get may be unexpected. This is the first one.
The second benefit is, of course, it's obvious to be honest. Everyone understands it. Let's not worry about this KOL round. Of course, to be honest, I have only participated in the KOL round of one project in this round, and that was during the bear market last year, which was in October. In this bull market this year, I have not participated in any KOL round of any project. I think we can talk about this topic separately when we have the chance. Whether this KOL round can make money or not, I won't go into details. So this is a benefit, at least everyone will think it is a benefit. You can have some low-priced chips, you can use this to build a good relationship with the project party, and get some so-called first-hand information from the project party.
But let me say it again, I have always tended to present my so-called KOL personality by highlighting the theme of research. Why is that? First, to be frank, it may be the so-called vanity, to make people think that you know a lot, and give a thumbs up, which is a normal human nature; the second and more important thing is that when I was writing articles before, my purpose was to get some feedback from others on my ideas. After I became a so-called KOL, I still got feedback, but this feedback was different, that is, people would push some information to me, whether they heard some information from hearsay or they also did their own research and so on, they thought, Jason brother, can you help me look at this project, this project seems to be good, is there any chance, (through this way) you may find some good targets.
At this time, I actually think that the benefits to me are relatively greater. Because there is too much news and projects in this industry, it is impossible to read them all. So many of my followers, to some extent, are actually helping me to look at many projects. They help me filter them first, and then send the projects to me. So first, I have many more sources of information about projects. For example, if I have 60,000 followers, then there may be 60,000 people who help me find some information. The second point is that they have already screened them. Some of them may be from institutions, project parties, or old investors. At least when they give me their reasons, they can give me one, two, or three reasons. Based on their content, I will conduct in-depth research, or I will dig up some relevant information for secondary processing. I think this is the so-called feedback, from feedback on whether my concept is correct to feedback on effective information. This is the process of my becoming a KOL.
FC:
I didn't expect you to be so direct and honest right from the start. I was going to ask you many questions later, such as the information question. So why don't we start with the main part, which is trading. I would like to ask you to briefly introduce what you think your trading strategy is like? A trading strategy may include your expected return, how you configure it, your track selection methodology, etc.
Jason:
First of all, I think I am still in a fundamental analysis trading strategy, even though everyone said last week that fundamental analysis is basically unprofitable. I also said that looking for fundamentals in the crypto is like looking for love in a foot massage parlor, but I think this is really important. First of all, it may depend on how you define fundamentals. This may be more intuitive if I use my model for looking at projects directly. I generally look at projects in several dimensions, that is, looking at the sky and the ground.
Looking at the ground means I have to make sure that the floor under my feet is solid, or at least not a floor that will fall off after a few steps. So I must first see how strong the support of the project is. That is, after I buy it, even if I make a mistake, it will not fall too much, or even return to zero. Of course, I also have counterexamples. This round, I bought a coin that fell by 90%, which hurt me to death. In fact, it was because the floor was not solid enough. So this is my core. I must make sure that the coin I buy does not have a particularly large downward space. Looking at the sky means that it has a relatively high upward space.
Let's talk about it in detail. For a project, except for MEME coin, we will call it value coin. The first thing is to look at its organization. Although everyone has a lot of emotions about this round of VC, I think at least a good VC, a powerful VC, has helped you to check the team of this project. Just like what you said, FC, they may have had a drink at the table and know what this project is about. They have checked the entire project. In addition, a powerful VC has a certain bottoming ability. As long as this VC has not completely withdrawn, it is also responsible for the price of its portfolio.
The second is whether the project's business data is strong enough. For example, for a DeFi project, I will directly look at its TVL and transaction volume. If it is an Infra project, I will look at its ecosystem, how many projects have accessed it, how many requests it may have made on the chain, etc. I want to make sure that this project is not a dead shell project, and it is still doing things.
The third is that fundamental analysis and looking at K-line analysis do not conflict. K-line analysis is also a type of fundamental analysis. Fundamentals is a very broad term, which means that you should have a sufficient process of obtaining and processing the overall information of the entire project as much as possible. Many friends say that looking at K-line analysis is metaphysical, and that those who look at K-line analysis look down on those who look at fundamentals, and those who look at fundamentals look down on those who look at K-line analysis. I think there is no conflict, and I also look at K-line analysis. Let me give you the simplest example, such as Curve. This round of Curve performance is very rubbish, but I doubled my money in almost a week on it, because when it was in a bear market, Curve was only 40 cents, and it was already in a bull market, and in addition, it was okay (ecology, trading), unless the project directly returned to zero and collapsed, otherwise the 40 cents support level would still be very strong, so I bought some when it first touched 40 cents, and then quickly sold it at 80 cents or 90 cents.
So this is also a direction to look at the K-line. First of all, it is to see whether the current price of the project is at a historical low, or whether it has risen too much. After reading this, what do you think of the valuation of the project? At least in your heart, you may think that the project has a potential of 10 times, but now it has only doubled. Is it worth getting on board? But if you think the potential of the project may be three times, and now it has more than doubled, do you need to take such a big risk for the next little bit of remaining profit, at least within your expectations, because once you get on board, you can't stand the drop of one time up and three times down.
So the first three points, investment institutions, business data, and K-line directly determine whether I dare to step on this floor. I think every trader is like playing the game of hopscotch. You keep jumping forward. You may jump to the grid in front, and the grid floor collapses and you fall down. You may jump to another grid, but this floor is solid and supports you. So I have to make sure that the grid I jump down to is relatively safe and will not let me fall badly.
Another thing to look at is how much room this project has to bounce upward. Believe me, there are many wealth codes that are clear and written directly by the project party. For example, a project I just bought yesterday, called Connext, was renamed Everclear. I would look at the project party's documents, medium, or forums to see if there are any milestone plans for this year, such as going to the test network, the mainnet, brand upgrades, or some major cooperation, or what level of data they hope to achieve. As long as they are not bragging, they can write this plan here relatively reasonably, and even write the time more clearly. I have three projects in this round, all of which are like this, that is, they have received very good returns, and they are written very clearly, so I know that this project will have some relatively clear benefits in the future. It has benefits here, so I will judge how large this benefit may be and what kind of price change this benefit may bring to this project.
But I must give priority to safety. I think this may be due to my personality, and it is also the reason why I can't get a 100x or 50x coin. I must ensure safety first, and then ensure how much room it has to go up. I just said that looking at the project's roadmap or some official information, it can not only let you know whether the project may have some good things in the future, but also give you (expectations), which is equivalent to letting you hold on. When this good news is not fulfilled or fulfilled, you will find that it is not right. This good news should be very big, but why is there no change in the price? You will take it patiently, and you will get it. At least you will run after your expectations are met, and you will not often encounter a situation where I am at the foot of the mountain, how come I don’t know that there will be such a big change next month?
In fact, many people are also curious about why this industry is full of so-called insider information and rat trading, but I think there are also many of them that are open to the public. As long as you look for them carefully and evaluate them carefully, you can find this kind of information. So this is the dimension of a single project. I may use these methods to judge the downward and upward space. In fact, I think the logic is the same as that of many of my friends who do K-line. I see them draw a few lines, and then calculate the profit and loss ratio for me, and then tell me that this is very cost-effective. After I buy it, I may withdraw if it falls by 20% downward, and I will stop profit at a certain amount when it goes up. I think the so-called fundamental analysis is the same logic. Everyone is pursuing the profit and loss ratio. However, if you only do K-line, you look for the profit and loss ratio from this complex K-line. Then when we do research analysis, we calculate a profit and loss ratio from a large amount of external or internal information. So this is my view on the project.
FC:
You just mentioned valuation, and I would like to talk about how you judge whether the valuation is cheap or expensive?
Jason:
I think there are many dimensions. The first one is, for example, Connext. The cost price of their last round of investors was FDV250 million US dollars. This is publicly disclosed. I am not sure whether it is true. Let's look at the fair disclosure of 250 million US dollars. The current price of Connext was 0.18 yesterday when I bought it at the lowest price. At that time, FDV was just over 100 million. This is definitely a loss for investors. Although it will not be unlocked until 4 months later, at least it is now losing money on the books. If it is unlocked after 4 months, it will at least break even on the books, or even make a profit. At least from this perspective, this project is completely undervalued from the perspective of the valuation of the cost price that investors invested in it at the time. As long as this project is not a particularly disgusting garbage project, it can at least allow investors to get their money back. Then there may be an increase of 100 million US dollars. As for how much the 100 million US dollars can increase, we may have to take it one step at a time, or look at the valuation space of the entire project and the entire track and how much market share this project can occupy in this track. So this is the first one. I think it is quite useful. You just look at the investment cost and the current price of the project. Of course, there is one thing to note. You have to ensure that the investor has not completely unlocked the exit. Some investors have already run away, and this project has fallen into pieces.
The second is that I think it is still based on the logic of the track. How big do you think this track is? How big is the ceiling of the first dragon that can be accommodated? You have to estimate the value of this track first, and then estimate the value of the first dragon in this track, and then you can judge whether the current project has the potential to become the first dragon. If it cannot become the first dragon, is it the second or third dragon? In this way, I think it is also possible to roughly estimate a project, whether it is currently undervalued. In addition, I think the others are relatively fragmented content, for example, you can look at the data of this project, whether the current TVL or trading volume is worthy of its valuation. Or you look at the same type of project, for example, this project looks obviously more garbage than it, and the data is not very good. People pull it so high, regardless of whether it is pulled so high by the dealer, then at least for other retail investors, you have a comparison in your mind, we think this may also be a way of emotional valuation.
FC:
I can add my thoughts on this. First of all, I recommend a book called "Principles of Valuation". This book is quite interesting. It is not based on the data of PE and PS. It actually analyzes the valuation from a more sociological perspective. It is quite interesting. Then I think that we may use more comparative valuation internally, but there is actually a very important point in comparative valuation, which is the splitting of key indicators. For example, in the game track, what is the key indicator? Is it the on-chain data, the independent wallet address, or the number of transfers, including the wallet? I think it is necessary to split this very clearly. Then another thing is that the logic of comparative valuation written by Mr. Pima (Twitter @LeePima) is actually quite interesting. He actually took Ethereum as the anchor point, and then in each ecosystem, such as the proportion of DEX, he used past data to make an average value. I think this is also a logic.
Jason, you just mentioned something about the upward space, the roadmap. Last year, we saw a project called BEAM. Because we invested in YGG, when we scanned the game guild track, we found that in fact, except for YGG and merit circle, basically no one in the entire track has done it. What does this mean? You found that they basically updated Twitter, Github, of course, some of them did not have code, and discord was not done much. At this time, there were only YGG and merit circle. Then merit circle published an article at that time, saying that we would build a sub-chain called BEAM on Avalance. In fact, after the release, the market did not react at all. Then we actually talked to the team at that time and bought their token. Now it is still rising quite well. It should have gone from less than 100 million when we bought it to more than a billion US dollars now. So I think this is quite typical. That is to say, the change in the roadmap you mentioned, I think the essence is to reshape its valuation system. It used to be a guild, but now it has actually become a valuation comparison with Immutable and Ronin. So I want to ask you, how do you judge the change in the roadmap or the reshaping of its story, and whether the market recognizes it?
Jason: I would make a rough estimate. I would look at the roadmap, and then wait until the roadmap is fulfilled, and its price reaches a good increase. The winning rate may be 70%. I think it is still a very high winning rate. But there is definitely 30%, that is, even when the roadmap is fulfilled, people don’t react. Whether it is the project itself, the expectations are insufficient. I will give you a typical counter-example. Polygon wants to do a coin swap. Generally speaking, people think that the coin swap will increase by at least 100%, and the coin swap will pull the market. Polygon also wants to do various narratives, chain aggregation, and chain abstraction. In fact, he has fulfilled the roadmap he made, and the coin swap has begun. Chain aggregation has also begun, but the price has not changed. So this is a very typical counter-example. Of course, the logic of this counter-example is that we are now wise after the event. It can be said that Polygon has already reached the ceiling of tens of billions of dollars. What else can he do? Moreover, in terms of the proportion of transactions on all public chains, the number of Polygon transactions initiated has been continuously compressed. So this may be the reason why even though the roadmap has reached such a position, its price has not changed at all. This is a counterexample.
I would just like to add that BEAM is also a project that I was very lucky to buy, but because of my lack of knowledge at the time, I ran away when the price was more than doubled but less than three times. I didn’t expect that it would be a project that would increase by more than ten times. For example, this is the project that impressed me the most. At that time, it was at 0.07 and it was grinding at the bottom for a long time. Then its roadmap was clearly written, that is, it would be launched on the test network in April this year and on the mainnet in June. It was too direct. At that time, I kept following the dealer and kept absorbing funds from below. I bought a little bit whenever I had time. I bought a lot, and then it went up several times. So this is a very positive case, including Vanary just announced at noon today that they are going to go on the mainnet, and it has pulled up more than ten points. The same goes for Connext. I have already announced their roadmap on Twitter. I will just take a look at their official public forum, where they have written in great detail about their attitude towards this upgrade, the preparation time, the upgrade time, how much budget they have allocated, and how they are going to create market momentum for this upgrade. All of these are written publicly. We can also see that the price has more than doubled compared to the first proposal, and is still rising steadily.
Let's summarize and look at these counter-examples and positive cases. First, this project is not big yet. It is not big yet. Generally speaking, there are two ways to realize the roadmap. One way is that it directly changes the valuation model of the project, such as AO to AR, from a storage project to an AI project, an AI computing project. Then you may have previously valued storage at 1 billion, and your valuation of AI at 10 billion. This suddenly changes the valuation structure of the entire project, from a to b, which is a change that greatly improves the valuation of the project. The other is that you have not changed its structure, it is still doing the previous things, but after it reaches this position, it has changed from a small a to a big a. Although the ceiling of what it does is still here, it may be 1 billion US dollars, becoming a big a means that it has moved from 100 million US dollars to 300 million US dollars. Then your valuation is still 1 billion US dollars.
Let's look at the negative examples. There may be two extremes. One extreme is something like Polygon, where what it does does not seem to change its valuation structure. It is still what a chain should do, although it is in the narrative. So how much should you value a Layer2? 10 billion US dollars, OP, ARB, everyone is at this position. So is his current market value already overdrawn, or has it been fully cashed out? It's like a bottle of water, 500 ml I have already filled 450 ml, and then add 50 ml, I fill this bottle, that's it. So this may be a negative case, and including what I just mentioned, its transaction share is constantly being compressed.
There are some projects that are constantly showing off in front of everyone. This project itself has little volume and is not very well-known. Then they shout at everyone to come and see what I am doing. This is useless. Not many people care about it. It may not be very strong. So we can see from the three projects of BEAM, Vanary, and Connext that they have several common characteristics: First, when it releases the roadmap or is about to be fulfilled (before expectations), it is not the kind of project that is already known to everyone, but it is not the kind of unknown project. It is a decent project. A decent project may have a market value of 100 million US dollars in a bull market and 50 million US dollars in a bear market;
Second, this project has some strength. For example, BEAM, I was particularly impressed. I was so happy after I sold it that I realized why I didn't see this data earlier. I remember that there were hundreds of millions of US dollars in BEAM's treasury, and they were not its own coins, but other assets besides its own coins. It was so rich that it didn't need to rely on selling coins to make money. Another example is Vanary, which I think is very interesting. It is a typical project that can market itself, or it can show some so-called strength to the outside world. For example, it applied for Nvidia's plan and said that it had reached an official partnership with Nvidia, and then it went on a mainnet, Google became a node of it, and it said to the outside world that it had reached an official cooperation with the world's largest technology company, which was quite bragging. But anyway, he was able to get this thing.
Let's talk about Connext. I saw that before it changed its name, some big names in the industry who had a good reputation paid attention to this project. That at least proves that this project is not unknown. There are still many people paying attention to it. It's just not very famous. Although it is not so well-known, it has strength. Connext cooperated with Renzo, and its TVL reached 1.2 billion US dollars. Its market value is only 20 million US dollars. Then polychain and paradigm invested in it. They are all top VCs. With such a small market value, they openly said that they would release favorable news. If they didn't pull the market, it would be a slap in the face of their investors. And what's more important? They directly posted the money they were going to spend on this event in their official forum, and directly released all the budgets. I just want to spend 3 million US dollars this time to prepare for this event. If you don't pull the market, where did you spend 3 million US dollars? It must have been embezzled, so you must pull it up. So this is a common feature of these projects. At the same time, we can compare the two extremes of a project like Polygon that has already filled its water bottle and a completely unknown project. At such a middle point, such a strategy is very effective.
FC:
OK. I will ask another question, because I remember you wrote on Twitter that you strongly recommend everyone to read first-hand information about your path to obtaining information. The problem is that when you see the roadmap released, everyone has actually seen it, or I think it has become a relative consensus. So I am very curious about this question, how do you know which layer you are in the entire communication chain? Of course, because you are a KOL, you are different from those of us who have no information. Of course, it is possible that I am his investor and I know it earlier than you, so how do you know which layer you are in, because the layer determines whose money you actually make.
Jason: First of all, I am definitely not in the first layer, because when he has semi-publicly written the corresponding content in some media or in the community, it means that I am definitely not in the first layer. But even so, we just talked about many projects. People have put up the roadmap for half a year and no one cares. Before the roadmap is realized, the market is pulled up, and everyone finds out, why didn’t I see this thing at the time. So this is what we talked about at the beginning. There are many, many obvious wealth codes in this industry, and you can find them without asking around every day. Let me give you another example, which left a deep impression on me. At that time, Vitalik posted a tweet in a social software under Mask, saying that this is very important, we must support such products, and I am very optimistic about it. Then in an article he posted on his blog, the project was also captured in a very technical screenshot at the bottom, but because this project was relatively niche at the time, when I saw it, there were only 200 reads, and no one paid attention to it. And because this project is very Crypto Native, they are all some people who we tentatively call non-cryptocurrency speculators, so this was not spread. So I took a gamble, took a screenshot and sent it out to say, brothers, Vitalik is very optimistic about this thing, and this coin has also increased a lot.
So to sum up, there is a lot of content, even if it is already in a semi-public or public state, but because the amount of information in the entire content industry is really too huge, and more importantly, it is one thing for you to see the content, and it is another thing for you to understand the content. A sentence can be interpreted differently by different people. There is something going on here, but if you think about it a little deeper, you will find that this is different. There may be other things behind it. For example, I saw a proposal in the upcoming Prague upgrade of Ethereum this afternoon. Now 32 Ethereums are staked to form a verification node. It is going to be changed to 2024, which is equivalent to directly increasing the stake of each node by several times. Then I immediately went to find two friends who I know who are doing staking projects, as well as other friends who are more familiar with this, and pulled a group to discuss which projects this thing may have some changes, whether it is good or bad, and immediately interpret it. This is public and posted in the minutes of the weekly developer meeting of Ethereum. So this is what I want to say. The core is that the content seen and the content interpreted are two layers.
Then there is another thing that I often share with my friends in the community, which I call the feast theory. When I decide to go to a table for a feast, I have to basically judge clearly, which table I am at, and whether I may be the last one to pay the bill? This is very important. Today I saw a digital collection, and they posted a screenshot very arrogantly, saying that there is always a banquet that will never end. Sorry, we ran away, and you happened to be the one who came to pay the bill. So this is very important, that is, you have to understand the entire chain of information dissemination, even if it is public information, you are at which level. I think there are two most obvious judgment indicators. The first is whether the currency price has changed when you see this information? If it has not changed, it means two points. First, this information is invalid information, it will not affect the currency price; second, this information is valid information, but it has not been spread, or no one has realized it. The second thing you need to judge is whether the information is long-range or short-range. For example, the Prague upgrade will be 200 days later, and your current information may not necessarily affect the price 200 days later. If you think this information is more important, it may directly affect a project, but you find that the price of this project has not changed, you have to immediately judge the logic. This is very important. You must immediately judge whether it is invalid information or not disseminated. If the price of the currency has not changed, and you think it is the second one, then you must immediately use the shortest possible time, put aside all the lengthy interpretation and research, and make a quick judgment. If it is valid information once it is disseminated.
UNI is also a very regrettable example, because there really is not that much time. If there was time, maybe I would have seen them post a proposal to change their economic model and allow stakers to have returns. This proposal was posted on their public forum. An hour later, the media saw it, and then the media released it. The price still went up, from 7 yuan to 15 yuan immediately. There was a full hour in between. During this hour, this post was thrown on this public official website and no one responded. There are several replies below, most of them are engineers or they don’t consider the price of the currency much, just some discussions on this issue. If time goes back, I saw this post at the time, I saw it was so important, UNI, such an awesome project, is going to change the economic model, I opened it again and found that the price has not changed, what do you think I should do?
FC:
Then I would feel that I was wrong.
Jason:
I belong to the second type. I think that it doesn't matter whether it is right or wrong. If the news is released, but the price does not change, you bought it, and it is not wrong. It is not that the news is released and you think it is good news, but the price still falls. At most, it will occupy your funds. I think any problem should be discussed according to the situation. First, I personally think that there is no need to set a stop loss during the rising period of the bull market, because in fact, looking back, everyone often finds that there may be a period of time, such as a sudden shock during a certain period of time, and this may fall. After you sell it, you find that it has risen again two weeks later, which is also very uncomfortable. If you think it is in an upward stage, I personally think it is better not to set a stop loss. Of course, there are negative examples. I bought a project, but I didn't expect it to fall by 90% in the bull market. Of course, this project has its own problems. I ignored a very important unlocking mechanism of its economic model. I won't go into this too much, but this is an example. At least I think you have a relatively sufficient understanding of the project, and then you don't need to set a lock in the upward space. Of course, you have to have an early warning line in your heart. I personally never place an order. I never place an order. I just buy and sell spot because I can't. Once I place an order, it's hard for me to sleep. The second is that I can't ensure that the order I place is exactly where it should be. I place a 3.5 yuan order, and it clicks to 5 yuan. I'm so uncomfortable. It's something like this.
FC:
In fact, the reason why we like to buy coins based on so-called fundamental analysis is because I want to sleep well, because we have been Buy & Hold, but it just doesn't rise much. This is the problem. I just heard that one of your biggest characteristics is that I think you have your own process for capturing information. First, how do you find it? There are two forks. One is that your fans give you feedback, and the other is that I actually think you have some fixed websites and information sources, and they are very first-hand. The second is that after you find this information, you will do one thing, that is, you will find a very important key person around you, that is, the person who knows the most in this field to discuss. We do the same in investment. You often ask about a project, and now you have asked many people. This will actually make your information more complete. The third is actually to combine your own judgment of the entire track for a self-interpretation, and you will publish it. I think the process of publishing is also an interaction with the market. I don’t know what else in this chain I haven’t mentioned? I think this is actually quite useful for everyone.
Jason:
In this way, I will go through all these layers. First, after I see a project, I will first check the Twitter of this project. I will definitely check Twitter first. I will see how many people I follow on Twitter. I think this is very important. If I follow some very OG people, these people have a strong ability to make money, or these people are very core people, I open a project and find that among these people I follow, 3, 5, or 8 people follow this project. This is a very important signal. You will see that the number of people I follow on Twitter is very small, that is, I must make sure that the people I follow are really capable, because I will use this indicator to measure the project. Does it have this strength? This is the first one. I think it is very important and I benefit from it very much. Second, if I find that some of the common followers of this project are very awesome, I will quickly check the K-line of the coin price of this project, at least I have a bottom line in my mind, whether this project has risen or not, how it was before and how it is now. Third, I will go to Rootdata. I think this website is really well done. It is a website created by ChainCatcher to look at project investment and financing information. I will use this website to look at the historical investment situation of the project to see if there are any investors I know or if there are any very powerful investors. I will have a general idea of these points. Fourth, I will look at what the project does, whether it is narrative or outdated, etc. This is the fundamental research.
OK, after this set of research, I have a clear idea in my mind. I think this project has the potential to be followed up. I will copy the name of the project directly into my WeChat, search it, and see if anyone has mentioned the name of this project in all the groups or peer-to-peer chats I have joined. Maybe someone has promoted this project before, but I didn't care. Now I have fished it out for the second time. In this process, I am looking for the suppliers of the community related to this project, or even the staff. In this way, I can judge the project and make two judgments: the first point is how far away this project is from me, and whether there are some sources related to this project around me? If it is very far away from me, that is, after I searched for this project, no one has discussed it, I might pass it, because I think I may not be the first to catch it, or I think the first person to eat crabs is easy to be caught, and I don’t want to be the first person to eat crabs, even though it may really be a king-level project, so I will let it go; secondly, I will look at other people’s comments and discussions on this project. For example, in the group, if someone has invested in or participated in this project, I will say, "Brother, I see you talked about this, and I may ask about the situation of this project." This is the second path. After collecting all the information about these projects, I have some common voices about the project, etc., and I will invest at least an hour to go through all the six main sources of information for this project, including the official website, Medium, white papers, forums, DC, and Twitter. Then I will look for some Chinese and English media to see if the media has any relevant comments on this project. This may be a more systematic and structured screening method for me.
FC:
I think this process is very fundamental research. I want to know, when these information sources come in, do you search by track? Or do you only look at the project as a dimension?
Jason:
To be honest, I am not good at this. I am not good at this. Because I don’t have a team, I am just one person. But even if it is me personally, when I see a project, I will subconsciously classify the track of this project first. There are three types of tracks: the first type is a hot track with a large space; the second type is a saturated track; the third type has two types, one type is a past track, which can actually be called a saturated track, and the other type is a bragging track or an illusory track. I may hurt the feelings of some friends by saying this, but if I stand from a trading perspective, it is indeed the case. What decentralized science, this human immortality, this sounds awesome, but forget it. Through these, I can probably filter and screen the relevant content.
FC:
Value investing has a circle of competence. Do you not invest if you don’t understand it? Do you have your own circle of competence?
Jason:
I think my circle of competence is very clear, which is both a good thing and a bad thing. My ability is that I still see a lot of Infra projects, because I am a programmer myself, relatively knowledgeable about technology, and then I personally invest in and participate in quite a few Infra projects. This is the core of my ability, but it is also the boundary of my ability. So in fact, as you can see, I have never shared some social media, games, etc. on Twitter, or almost very rarely, because I am not familiar with this track, and I dare not invest if I am not familiar with it. Even if I invest, I will treat it as buying a lottery ticket.
The answer to this question also has two small branches. First, I think there is a saying that is particularly true, that is, everyone can only make money within their own cognition. I think people often regard this saying as a derogatory meaning, but I think it should be like this. People should make money within their own cognition. If you feel that you have not reached the level of cognition, I would rather choose not to make money first, and expand my cognition, or find someone who can complement my cognition and let him make money. After he makes money, we will share the profit.
The second thing is that I don't feel anxious about it. For example, I played Memecoin very badly, and I felt so bad. I didn't catch many things. It was very uncomfortable. I saw that everyone's return was 3 times or 5 times every day. You said that you were anxious, but I felt that it was okay. What was the reason? I think there is a very magical phenomenon in this industry, that is, everyone can talk about various theories, but everyone can make money, just more or less. Maybe many theories are still contradictory, and many theories may not make sense, so I feel like I am in a big orchard, and everyone comes here to pick fruits, some pick peaches, some pick apples, and some pick watermelons. You can pick the ones that suit you. For example, there is a very thin person who likes to climb trees to pick cherries and apples to eat. It's okay, but don't carry a big watermelon, you can't carry it; but there are also people who are very strong and strong, they can carry a big watermelon directly, but cherries and other more delicious and expensive fruits may not be eaten, because if you climb a tree, you may fall down later.
FC:
There is actually a trap in this circle of competence, which is how do you accept new things? For example, you must have reviewed and found that you missed something, so what mechanism do you have now to prevent yourself from missing this thing?
Jason:
I think the best mechanism is to find an external friend, partner, no matter what word you use. This is why I created my own small community. I try to diversify the people in my community. For example, there are friends who are very good at playing Meme, and there are also friends who are very good at reading K-line. I just don’t understand it. Everyone comes to see it, and everyone shares it in the group. At worst, I will just buy a little first, get stuck after buying it, and then study it. I think it is the fastest way to learn from everyone. If you are beyond a certain ability boundary and it is difficult for you to supplement it in time, then find a way to find such a friend through various means, and everyone can supplement it together. This is the most direct way. Solve the most important problem at the moment first, and then you will have time to spend time learning later, but I think solving problems is the most important thing. In addition, don’t be too repulsive to some new things, even if this new thing may be contrary to your values. Don’t resist it too much from the heart, just reject it. This is my idea.
FC:
One is from the psychological level, and the other is from the operational level. I remember that you were a consultant for many projects, which means that you are very close to the projects. For example, after you became a consultant, you looked at the success of a project from the inside. Here, success is narrowly defined as a good price. Do you think you have any new understanding?
Jason:
I think so. First, the project still needs to be active, not too obedient. I have participated in some projects. The founder of this project will say that I look down on the so-called pumping, all kinds of news, and many of these retail investors will care about the content. He will despise it, but the market will educate him. I have participated in many such projects, which also made me speechless and helpless. So this is the first thing. When I contact the founder, I have to see whether the founder is too halal. I don’t like the kind of founder who is very halal. The second is whether this project can occupy a position in this track. Occupying a position is very important. For example, Puffer is also a top brand in the Restaking track. There are many projects in this track. There are at least 30 projects in this round. Other projects are unknown. No matter how hard you try, you may not be able to occupy this position. There are many factors that occupy this position. Whether the team is strong and whether there are strong investors to help you, then this is another set of methods.
It means that you can hold your position, which means that at least you have a bottom market value to support you, so that it will not be too depressed. Then you can do something good, or embrace the market. I don’t call doing something embracing the market. Then your pricing will be relatively flexible and will not be stagnant.
FC:
In fact, I have seen good founders. First of all, I think they realize that Crypto is something with strong financial and natural attributes. It is very important for them to have this recognition. Secondly, I actually have a little trick. I will ask the founder what coins you have bought and why you bought them, or I will ask him to give me his chain address, so that I can see what kind of interaction you have really done. The third thing is that I think what is his relationship with the community, whether he knows the community language and whether he has entered it. Another thing is whether he has a strong sense of self. There are many people who actually think that you just said that, for example, if you tell him this, he will think it is not okay, right? Or he will say, "Oh, I don't do this, right?" This is too rubbish, but many people actually learn actively. For example, when we invested in a project, I was particularly impressed. I won't mention the name. At that time, he had just come out of a big company. When we first talked, he was particularly interested in Web2. Then we gave him about 10 articles and several white papers. Then a month later, you found that the things this person talked about were different, so whether he is hungry is also very important.
Just now you mentioned that position. I think the most important thing is to judge the narrative. Do you have any insights on this, for example, what kind of narrative do you think has the potential to emerge? Or how do you determine which narrative is most likely to emerge? Do you have any indicators to judge it?
Jason:
There are two types of narratives, one is long-term and the other is short-term. I must judge whether the current narrative is likely to happen in this cycle. If it happens in the next cycle, I will buy it in the next bull market. I must try my best to judge whether this narrative is the narrative of this round. It must not be placed between two cycles. That is very uncomfortable. I think this is very important. So how to filter whether the narrative is in this round? A few points, I can only talk about it from the perspective of Infra. I only participated in two tracks in this round of Infra. I mean my own investment and consulting. One is staking and restaking, and the other is chain abstraction to cross-chain interoperability. Staking is because I spend all day on Ethereum’s forum. I won’t expand the logic here. I roughly felt how Ethereum’s staking will be at that time. The next stage is restaking. Eigenlayer is coming out. This is the first one.
The same goes for chain abstraction. In this round, I personally think that there are two tracks that are the only innovative tracks, which are completely new narratives that come from 0 to 1. One is the Bitcoin ecosystem, and the other is the modular blockchain. The continuous increase in the price of the modular blockchain Celestia also proves that this track can hold up. As for the modular blockchain, we deduce that with so many chains and various assets scattered all over the ground, there still needs to be something to bring it together. This may have been called cross-chain in the past, and now it is called chain abstraction, etc., which is what is needed. So after I made my judgment on these two, the first one was in line with the Infra track that I am best at, and the second one was in the corresponding narrative, and you can clearly feel that there is such a strong momentum, and at this time it is highly likely to happen in this round.
Then of course there is a very obvious indicator, which is to look at the performance of investors. In this round, there are still a lot of restaking projects, including the cross-chain projects listed on Binance, in addition to the two projects I just mentioned. The outburst of primary projects directly determines that in this round of cycles, the secondary market will definitely make some splashes. So this is the outburst of primary projects, which directly determines that this narrative may be a main rising tone in this round. Including games, I posted a tweet in November last year. I think the logic of the post is relatively comprehensive. I talked about why I paid close attention to the game track in this round, so I also bought a lot of game public chains, because in a report released by Binance Research Institute, I saw that half of the funds in the primary market in the last round were invested in the game track. So if a certain institution has a 4-year cycle in the crypto, and an institution has not withdrawn the money in two cycles, then this institution will be finished in 8 years, and LP does not agree. In the last round, half of the first-level funds were invested in this track. Even if this track fails to take off, the investors are very anxious and urge the project party to work quickly every day. This is also a relatively important indicator.
FC:
I think I have an experience to share in this area. If we do secondary trading, let's talk about the fundamental level. I think there is a ranking, that is, macro is greater than track and greater than fundamentals. That is, macro timing is the most important. As long as you buy at a relatively low point, as long as you buy last year, and you don't buy too bad, your multiples are basically OK. The second is the track. As long as you buy the right track at the right point, it is relatively better than those unpopular tracks. So what do you choose in the end? In fact, the essence of fundamentals is to determine who is the alpha in your track. I think this is a great inspiration to me. I think we also followed this logic at the time, but in fact, our first step was when we chose the timing. I think that although we bought most of it, we were not firm enough at the time. Let's go back to the choice of track. At that time, we had several views. The first one was about games. I think it is the same as what we talked about today. I think everyone, whether in Asia or Europe and the United States, spent a lot of money. What does it mean? It means that there must be many excellent players in it. When good players are racing, these suppressed people will definitely create volume, and the volume will definitely be transmitted to the secondary level.
And I think the game was supported by fundamentals, such as data, positive externalities, and this is a game. The second point is why we bought AI at that time, because AI is not an industry narrative, it is a world narrative. As long as all the best people in the world are doing this, it will definitely have a deeper empowerment on this track, but the problem is that we care too much about the fundamentals. At that time, we scanned everything. To be honest, the AI stocks that we didn’t like all rose very well. I think this is a lesson, so this is one of the reasons why I want to chase the track.
The next question is, because we hope that everyone can use your trading method after listening to it, so I am curious about who formed this trading strategy for you? Or what did you see that formed this trading method and made it stable? Can you share it?
Jason:
I think first of all, no matter how many truths you listen to, it is better to lose or make some money yourself. I was very bad at cryptocurrency trading before, so I talked to many senior friends about how they made money. Then everyone talked about a lot of truths, and I integrated the truths. Finally, through the two results of losing money and making money, I kept getting feedback to correct my thinking. So no one suddenly enlightened me and made me a master. I lost money all by myself.
FC:
Actually, I see you from the outside, and I think you did a lot of things right. The first is that you talked to a lot of people. I particularly like what Feng Lun said, which is to learn from the advanced and follow the right path. In fact, you have to see basically all the good things on the market first, and this is what I want to do now. The second is that you just mentioned losing money, but in fact, you not only lost money, but you also did one thing, which is to make trading notes. In fact, every time you post a Twitter, you are making trading notes. Why do I buy and what is the reason for buying? I think these two points are very important, especially I think trading notes are very important to me. That is, when we look back a lot of times, for example, when you make money, you look back and you will think, damn, I was so awesome at that time, right? In fact, the reason you bought at that time is completely different from why you thought you bought.
Jason:
Indeed. Because I think the most important point is that the trading ideas need to be corrected, and you have to remember the correction process, and then review it every time, no matter whether you make a profit or a loss, you review it, and then gradually correct the ideas, instead of rushing around in a disorderly manner, patting your thigh every time you lose, and being very happy every time you make a profit. I think you shouldn't do this, you have to correct it, and it is very important to record your trading notes.
FC:
Since you are a KOL, I believe many people are curious about which information, such as on Twitter, we should take seriously and which information may actually be noise? How do you judge?
Jason:
I am just answering this question. I am not hurting anyone's feelings, nor am I attacking certain friends. The first is that you have to screen out really high-quality people. Wu Blockchain that he has compiled some relatively high-quality bloggers in the English and Chinese areas. You can follow them, or you can find some of those who discovered Alpha very early. It is difficult for me to have a concrete standard. In short, the people you follow must be good and able to output content, although they may not directly post Alpha information on Twitter. I believe that 99% of KOLs will not post Alpha directly when they discover it. They will definitely buy it themselves and then tell their friends around them. When it starts to rise a little, you feel safe, then post it on the public media and let everyone buy it. This is definitely the path. The second is which ones are not recommended to follow. I posted a Twitter before, which is that in a bull market, you should not eat melons, and don't fight, just concentrate on doing your own things. So don't follow those bloggers who have a lot of things to do every day. It takes up your energy. Anyone who delays your time is preventing you from making money.
FC:
The second to last question is, when do you think your trading logic, that is, fundamental analysis, will become invalid?
Jason:
This is a very good question. I think when I am lazy, it will become ineffective. Now I feel that I am still very hungry. To be honest, I need to continue to climb up in this industry. I need more things, so I keep revising my trading ideas and am more diligent in revising them. But maybe one day I will be satisfied. Once I stop revising my trading ideas, it means that I am out of date and my trading ideas are ineffective. So this is the first one, from a personal perspective.
The second angle is that the times have changed. When the track you are familiar with or your trading ideas have been structurally changed by the industry, for example, many friends are very worried this round because of the introduction of ETFs. Now the linkage with traditional finance is getting more and more coupled. Many friends say that it is not right. Bitcoin should be at 30,000 now. How can it reach 70,000? It is not right. This world is not what I thought. Then I start to doubt myself. When the external factors may directly cause the orderly world you are in to become chaotic, but you cannot leave it temporarily, this trading idea will also become invalid. So this is my answer from two angles. The first is the problem from the inside, and the second is the external problem. But no matter whether it is internal or external, in the end, as long as you keep correcting your ideas, you will definitely be able to fix it to the corresponding track and make it continue to be effective.
FC:
I think there is a saying that the market is always right. Secondly, I think the problem with many transactions is that they are emotional. On the one hand, it is about having feelings for their tokens. On the other hand, I think they have feelings for their understanding of the transaction. For example, if my fundamental analysis should be ABCD, then I always think he is right. I think how can I be wrong? But in fact, the game we play is a game of absolute rationality and the market is always right. If we look at it from the perspective of trading, let's not look at it from the perspective of value investment, such as Meme or these inscriptions and runes, in fact, if I think an ideal trader, he should not make judgments, or make good or bad judgments. What he should do is to judge whether there are trading opportunities. This is what I think a relatively rational trader should do. Or like some people, I have ideas about this world, and my money is voting for this world. I think this is also a style. In fact, I am also fighting. I don’t know what you think?
Jason:
I have the same idea as you, sometimes my emotion tells me that I don’t care about this thing as long as I can make money, I should look at it rationally, but sometimes I will inevitably have some preferences and aversions in my heart, so I am also fighting, I feel that I am constantly swinging left and right to correct myself, and then I pay a lot of price for it.
FC:
Then our last question is, if you were to recommend a book or content to everyone, what would you think everyone should read? Of course, in addition to listening to our program.
Jason:
I would like to recommend a book, which I like very much. It answers many of my doubts and questions in the business world, but it may not be related to the crypto. However, I was very inspired by it. It is called "The Innovator's Dilemma". This book helped me answer questions that I had never figured out before, such as how such a big company disappeared, and similar questions. So I recommend everyone to read this book "The Innovator's Dilemma".
