early?

2/x. how does being early allow you to win and how adopting a "race to be early" mindset will make you win >>

art by brunirax

Being early means in the capital world means to front run people. Head to the root of the waterfall. In the concept of long term digital blockchain value, there is no line to wait. You’re either there or you’re not. It’s not possible to know what’s hot unless you do it. Otherwise, belief from others will seep into your mind. I call this manipulation. Always attempt to predict where something is going to go from personal perspective, because then conviction is built. Then get in before them. Especially a trend or a shift in mindsets. Crypto will always just be a horse race combined with large scale poker. The fastest horse is the coin that is pumping the most and the biggest shark at the table will have the most control. Identify where the position of a specific sector is at. For ex. Gaming, SocialFi, DePin, Mobile. How can you tell if you are early?

Best metric: # of active users, why? because at least you can see how many others are with you on this.

Worst metric: TVL (Total Value Locked), why? because money is infinite and crypto is only ever growing.

Adopt a sniper mindset (not on-chain)

What is a sniper?

a person who shoots from a hiding place, especially accurately and at long range.

A sniper is good at hiding, spotting patterns, and firing accurately. Expressing this with a non-quantitative position, there is no better alternative to spotting trends than scouring social media. Specifically Twitter/X. I cannot express enough how whoever you’re following or friends with, will determine how you think, and in the end, perform. Curate your following. The best gems are people with smol amt of followers, high thesis points, and barely any tweets.

From a quantitative perspective, learn data. Where the data flows, the money will go. On-chain is the specialty as everything is public and analytics/tooling is still growing. The end-goal as an on-chain quant should always be to build a ML pipeline that intakes on-chain data and spits out results that are beneficial and back tested to be profitable for the trend/time being. The future is on-chain. More on this in another article. >.<

on-chain sniping bots are dead and dirty

By adopting a sniper mindset, I don’t mean go on-chain and fight to be first in line for a coin launch. With the rise of “sniper bots”. it’s almost suicide to be competing in this environment. Bananagun team reads bribes, and order flow is most likely going to be sold by 3rd parties in the near future. I wouldn’t trust a sniping bot with my private key unless it’s for easy functionality/on-the-go buying. The competition is fierce now with the rise of hundreds of memecoins getting launched daily. Only edge here is to find early contract address or to have straight up insider info on a launch from a specific team. And if you are buying a launch from a specific team, chances are, they will bundle. The risk is just too high unless you’re grinding 24/7 to find the perfect qualities in the contract creation lists. In minimal cases, using a sniping bot going to help you such as buying a new memecoin launched by so and so w/a short-mid term thesis would be convenient. Contrary to this, copy trading has been on the rise. I see copy trading becoming a isosteric and competitive space in itself.

copytrading

Copy-trading used to be super easy. “Follow the smart money”. This is a strategy to being “early”. Essentially piggybacking off whoever you think is smarter. However, with sniping tools that allow you to automatically copy-trade, comes the price of producing your order publicly to the tool team themselves. Sniping is all about profit, and if one had the opportunity to know the exact amount of copy traders a wallet has along with the liquidity that comes with it, what would stop them from making a quick buck?

The real 2 alfa’s here in copy trading is to find highly freq copy traded wallets, and front-run the other copy traders. Essentially sandwiching for profit. The second alfa (difficult) is to scour the place for smart traders. This space is becoming saturated quickly as many are building tooling to find “smart money” wallets (cielo, nansen, arkham). To find a good wallet is to search through all transactions in hopes to find a trader who is more right than wrong. Avoid copy trading snipers. You’ll just get fucked. More on this in a future article. >.<

catalysts

Crypto is full of “catalysts”. New things they seem. You might think you’re early on the newest technological advancement within the blockchain space. But crafting a thesis around the catalyst is the most important skill here. Sure, we know Uniswap V4 is coming, we know Eigenlayer is here, we know SPL-404 technology is being adopted, we know Bitcoin has a BRC-20 standard (runes). But in what timeframe is this actually going to become profitable for snipers like us? That’s for us to figure out. Sure the tech is cool, but will anyone use it? Will anything cause money to flow in that direction? If so, don’t think how much, think how long will it take and what will it take for them to go that way? If a thesis isn’t crafted around these questions, the bag will be folded way before actual adoption takes place. By listing out catalysts found on news articles, twitter, and group chats, it’ll be easier to organize thoughts and craft thesis’s around how money will flow into that sector (essentially pumping your conviction)

beta (β)

Now we have a new meta formed, we know money will flow into Uniswap V4. Considering we built enough conviction to load up on the Uniswap bag, where will we think money will flow after Uniswap has pumped? Because people always want to buy the little brother of Mr. Daddy. This is called buying Beta. And it’s applicable to every meta. It’s hard building conviction in a beta play, but it is usually more rewarding if you’re on a lower bankroll & late to the alpha. For someone with medium size, (6-7 figs), I’d say just stick to alpha and try to lever up if you can. Low size, (<6 figs), find the perfect beta and size accordingly. I usually consider Beta plays to be gambles, but in rare cases, they turn out to be solid bets, perhaps even competition to the alpha (best case scenario).

don’t die with your bag

“nobody’s ever gone broke taking profits”

Finally a message to also myself, as much as you love the concentrated bet, you must learn to part ways with your mindset. Be strong in your ability to identify alpha. You will always have another opportunity. It won’t be the exact same setup you saw before, but it’ll be masked in a way where you can see the vision.