• I have invested in $CELO, $FARM, $AAVE, $CRV and $UNI in the ratio of 4:4:1:1:1 .
  • I only invest in tokens where I'm active on Discord and in governance votes.
  • I selected these five tokens to get a taste of stables, yield farming, lending and exchange protocols.
  • My most common concerns are around a lack of collateralisation and a lack of clarity around governance token income.

An updated version of this report is maintained here.

Investing Principles:

  • Buy and Hold: Once I buy, I don't sell.
  • Dollar Cost Averaging: Every quarter, I invest roughly the same USD amount in DeFi.
  • Understand what I own & Own what I understand: I try to get involved in governance proposals in all platforms I own stakes in. I will continue to invest in protocols I understand and believe in, and stop investing in those I don't.
  • Don't look at returns: I don't track prices on a monthly or quarterly basis. I only look at how many units I have invested in each holding. I'm defining a unit as a fixed dollar amount (cost basis). I see this type of investing as all or nothing - either the token will go sky high, or flop to zero.

As a disclaimer, this is a summary of my approach at the time of writing. I am not recommending or tailoring this strategy to anyone other than myself and my own learning and investment goals. I see a high probability that I will lose the entire value of these investments. If you are investing in the same or similar DeFi tokens, I suggest that you invest only what you can afford to entirely lose. Consider it the price of learning.

Initial holdings - ~Jan 2021

My initial investments were made over a period from December 2020 to February 2021, and were made in the following tokens and proportions:

  1. 4 units - $CELO (locked and earning ~5.5% interest on WOTrust.US)
  2. 4 units - $FARM (staked in the Profit Sharing pool)
  3. 1 unit - $AAVE (staked in the safety module to earn ~5% interest)
  4. 1 unit - $CRV (locked for 4 years on
  5. 1 unit - $UNI

If you're new to these tokens, I recommend reading through this DeFi mini-course, which covers each token in turn.

There are hundreds, if not thousands, of DEFI tokens with much lower standards than the five I will review. My report will appear critical, but keep in mind that I own these tokens and their success is in my interest. Also keep in context that I have been getting deep into DeFi for only two months - many people behind DeFi platforms have been working in the space for years.


Platform type: Celo is the governance token of the CELO platform, which is proof of stake platform that operates independently of Ethereum (mini-course here).

Investment rationale: The founders in the platform are successful serial entrepreneurs. The Celo platform has a) a proof of stake protocol that allows for very low transaction fees of <$0.01 - tackling a major issue with Ethereum cryptos, and b) the mobile platform for payments,, has good UX design - unlike many DeFi projects.

Latest impressions and concerns:

  • Collateralisation. The Celo platform supports a US dollar stable coin called the Celo Dollar (cUSD). This stablecoin is backed by reserves that predominantly consist of the CELO governance token. While reserve levels are high at present, in a down-market, I am concerned that the CELO token will drop in value and Celo stablecoins could become undercollateralised and de-peg. On the plus side, is transparent about the level of reserves, and - to date - I find the community responsive to questions. I also find governance to be transparent (although currently quite centralised among early investors and employees). I would prefer to see an updated approach to collateralisation prior to further investing in the Celo governance token.
  • Locking. I am happy to lock my token to vote and earn 5.5% interest. Celo have separated voting out from custody of the token, so I can assign my votes without giving up custody of my Celo, which is comforting. I will continue to lock my CELO if I buy more.


Platform Type: FARM is the governance token of Harvest.Finance, a yield farming platform where the governance token earns 30% of the profits made by investors (liquidity providers) in the yield farming strategies offered by FARM. (Mini-course here).

Investment rationale: FARM had undergone a hack before I invested, and recovered somewhat. I believe systems that survive serious incidents are less likely to be complacent in the future. I also was drawn by the earning power of the FARM token. In contrast to many tokens that have no direct earnings at present (e.g. Uniswap governance token or Compound governance token), FARM earns 30% of all profits generated for investors on the platform. The FARM token has been priced very attractively relative to this stream of earnings, with the token price as low as between one and two times the annualised profit stream accruing to the token.

Latest impressions and concerns:

  • Transparency. Engaging on Discord, it is difficult to identify (even pseudonymously) who the real decision makers are. I plan to join some of the coding meetings in order to better understand what is really happening.
  • Financialisation. Harvest recently approved issuance of an iFARM token, which is a staked version of FARM. To me, this is a sign of increasing layering of complexity in the platform, giving it less straightforward and more ponzi-like characteristics. I'll be looking closely at that the way the Harvest community handles the implementation of the iFARM token, as well as keeping a close look-out for more careful consideration within governance proposals of keeping the platform economics simple and transparent.


I'll now provide an update on three tokens where I only invested one unit this quarter. This lower investment level is because I have done less diligence on these tokens. Expect deeper updates over the next months.

Platform Type: AAVE is the governance token of - a lending platform. (Mini-course on DeFi lending here).

Investment rationale: I determined that I should invest in at least one DeFi lending platform for learning purposes. I briefly reviewed Aave and Compound and choose Aave based on the (perhaps unfair) assessment that Aave was more decentralised, whereas Compound seemed to have some dominant VC backers. I also felt (probably more fairly) that the Aave governance token has a clearer vision for earning fees, whereas Compound tokens do not currently have any earnings.

Latest impressions and concerns:

  • Token Economics. While Aave tokens earn a portion of platform fees, the details are not clear on the website. Ultimately, token economics underpin the financial reasons to own a token, so I'll be keeping a close eye on improvements in communication of token economics from Aave on this front. Still, credit to Aave for having progressed this further than .
  • Collateralisation. The Aave platform (as are most lending platforms) tend to disproportionately service lending of volatile cryptos (like BTC and ETH) collateralised with stablecoins (DAI, USDC, TUSD). Collateralisation requirements are only a fraction of what would be required to cover a fall in BTC/ETH prices to March 2020 levels. This means the platform stability is reliant on a highly functioning liquidation mechanisms in the case of a market crash. I believe this risk is under-appreciated by the platform, although the presence of a safety module is a step in the right direction. (More analysis on collateralisation here).
  • Utility. My understanding is that much borrowing on these platforms is done in order to make leveraged long investments in BTC and ETH. I'll be keeping an eye out for whether there are less financialized uses of lending platforms like Aave that benefit the general public.
  • Safety Module. I have staked my AAVE in the safety module for about 5% annual interest. In return, my holdings could be slashed by 30% if the platform runs short of liquidity. I think this is a bad deal. I think the real market rate should probably be closer to 15% because I put the chance of needing the safety module (with current collateralisation levels) as quite high. The fact that few Aave holders are staking their Aave also suggests to me that this is an issue. One solution would be to increase the interest payable until staking rises to a predetermined threshold (say 75% of outstanding Aave tokens).


Platform Type: is an exchange platform for stablecoins. I have had limited exposure to this platform and so will reserve further remarks for a later post.

Investment rationale: I wanted to invest in at least one exchange for stablecoins. I was further attracted by the long-term staking features built into CRV whereby you are rewarded for holding your tokens for years. I have yet to understand the detail of this approach but - where there is long term thinking - I am enticed!


Platform Type: Uniswap is an exchange platform for ERC-20 tokens like $FARM. The DeFi mini-course covering exchanges is here.

Investment rationale: I wanted to invest in at least one DeFi exchange. I was attracted by Uniswap's forward thinking on foreseeing a protocol fee (a 0.05% fee on transactions that can be turned on and directed to the governance token) and also the strength of online documentation and the open source emphasis of the protocol. I have, however, had limited exposure to details of governance. More analysis to come in future posts.

Coming Up Next Month:

In March I'll likely do a deeper dive on CRV and UNI. To get on the list for the release of that report, subscribe at .

In the meantime, please do comment below if you identify mistakes/omissions or if you have a question.