Beyond outright scams, the stupidest mistake retail will make are category errors.

People will look at essential projects (oracles, credit facilities, DEXs) and think they’ll be worth a lot because people need these services.

This is wrong.

Tokens will ultimately be worth their cash flow distributed to holders.

This means if a project can’t capture value, it isn’t going to be worth very much, *regardless* of how much value it provides.

As I’ve said before, there are some critical pieces of on-chain infrastructure today in DeFi that ultimately have a very difficult time capturing value.

That doesn’t mean the project is bad, the founders are dishonest, or that someone is trying to screw over token holders.

If you build yourself as middleware, expect to be disintermediated as you try to increasingly capture value.

It has never been so easy for existing projects to replicate 3rd party functionality than in crypto.

Don’t expect people to be willing to share profits just because you invented a key piece of DeFi

The key when making middleware investments is figuring out what can either 1) punch through to be an aggregator 2) has some critical piece of defensibility that cannot be formed and brought in house to an existing project

I look for aggregators and network effect business whenever I make an investment, but my confidence in these traits have to be even higher when a projects starts out as middleware