alt Hacker NewsI spent a few years leading dev on decentralized exchanges, building bridges to other chains and building a sophisticated margin system on top of the trading pools.
A few things I think I've learned:
In its current state, most retail investors are simply supplying to the sophisticated investor.
Although some DeFi projects make a genuine effort to provide analysis tools to level the playing field, it's not nearly enough.
The safest least volatile yields in DeFi are lending your stable coins into a system such as aave. The yield is not far from a high yield USD savings account.
Exchanges such as Uniswap may be the most important legit tool in DeFi. The biggest problem is the liquidity provider's ability to protect their downside...so the investor adds on more sophisticated monitoring/hedging schemes. This gets us back to the retail investor being at a severe disadvantage.
Yes if you start doing analysis on DeFi and a lot of cryptocurrency markets, you can see very quickly that retail investors ("dumb money") are just providing liquidity to the smart money. There's a lot of unsophisticated money in these markets which makes it pretty fun to compete as someone trying to be smart.
It's even more brutal in the more established, traditional markets though. Obviously if you're going long and managing a portfolio that's a different perspective, but it's very hard as an outsider to compete with the smart funds in the world. You might be smart but most of those funds are very smart, well capitalized, and have a very deep understanding of market structure.