About the randomness of investing in hundredfold coins

In yesterday's article introducing Degen, I quoted a segment of data regarding the price trend of this token. According to the data on
https://www.coingecko.com/, this token has increased in price by over 1000 times since its launch on January 15 of this year until yesterday, making it a solid thousandfold token.

This reminded me of the "hundredfold token" topic that we often discussed in the past.

I remember that in an article from the year before last or last year, I shared some judgments about "hundredfold tokens." One of them was: if we refer to the cases from the last bull market (like YFI, etc.), it is very likely that the future hundredfold tokens (at that time) had not even appeared yet.

Now, the example of Degen truly proves this point.

If we take a closer look at its background and examine its price trend, we will find some very interesting phenomena.

It was launched on January 15 of this year, and its concept comes from a channel called Degen in a now relatively popular decentralized social application (farcaster.xyz). The token was issued on the second layer scaling Base chain of Ethereum.

So if we were lucky enough to catch it right from the start, that would have been the best.

Let’s rewind time and go back to that period to see what we, who experienced that time, were thinking and focusing on. Could we have noticed it back then?

Coincidentally, a few days before Degen's launch (on January 6), we had a Twitter discussion. I summarized the questions that readers were particularly interested in during that discussion, which basically fell into the following categories:

• The development and future outlook of BTC Layer 2
• The Bitcoin NFT ecosystem and potential projects
• The current status and future of the Bitcoin asset ecosystem (including ARC, Runes, BRC420, etc.)
• The potential of "gold shovels" in the Bitcoin ecosystem (like Bounce, Turt, etc.)
• Will the inscription tokens have another drop to allow latecomers to get in?
• Will a bull market start in the first half of the year?
• Opportunities for yield farming in Ethereum's second layer scaling (like Starknet)
• The current state of the Ethereum gaming ecosystem (like Magic, Bigtime)?

Did you notice? Not a single one of these questions was about decentralized social issues, let alone mentioning farcaster.xyz, the Degen channel, or Base.

At that time, I was aware of farcaster.xyz, but I still haven't used it until now.

Why?

Because it is not user-friendly for me. It only has a mobile version without a desktop or browser version, and I don’t like doing various operations on my phone. Additionally, registering for an account requires a fee, and the key point is that the payment can only be made using traditional payment methods.

These two points gave me a headache. Especially the payment method, which does not seem like a Web 3 application at all.

So I find it hard to imagine that I would use this application during that period.

I also knew about Base at that time, but in my view, Base did not have any outstanding features compared to other second layer expansions. I only knew one relatively famous DEX in its ecosystem, so I couldn't possibly pay attention to this token.

I estimate that many readers might have a similar situation to mine.

Now let's take a look at its price trend:

According to the data on Coingecko, I divided it into four phases.

Phase 1: From January 15 to January 29, its price rose from $0.000023 to $0.0003, an increase of over 9 times.

Phase 2: From January 29 to February 24, during this period, its price peaked at $0.005 from $0.0003, then returned to $0.0008. In other words, it increased by over 10 times but then experienced a decline of over 80%.

Phase 3: From February 24 to March 14, during this period, it rose from $0.0008 to $0.003, but then fell back to $0.0017. This means it increased by nearly 3 times but still did not allow users who bought in at $0.005 to break even, followed by another drop of nearly 50%.

Phase 4: Starting from March 14 until April 1, it began a surge, rising from $0.0017 to $0.06, an increase of over 34 times.

In the first phase, I estimate that many investors, even if they were lucky enough to buy it, would be tempted by the 9-fold profit and exit to take profits.

In the second phase, I estimate that many investors might not be able to endure the significant pullback and would cut their losses.

In the third phase, I estimate that investors who did not exit in the second phase, seeing that they had not even recouped their capital and faced another significant drop, would painfully cut their losses. Even those who were fortunate enough to buy in this phase would find it hard to withstand a 50% pullback and would exit.

It was only in the fourth phase that it saw the largest increase, the strongest influence in expanding its circle, and probably the most investors entering.

We might ask ourselves, even if we were lucky enough to buy it in any of the previous phases, could we endure the multiple crashes and temptations throughout the process and hold on until the final harvest?

As of now, Degen has increased by over 1000 times. If we analyze its growth process now, it would be less meaningful to get caught up in whether we should still buy it at this moment; what is more valuable is what experiences and lessons we can learn from it.

From Degen's thousandfold journey, we can see that to find a hundredfold token and achieve "hundredfold" returns, we can try the following two points:

First: Pay attention to new projects.

Second: Once we decide to invest in a project and hope for high returns, before it reaches our expectations, we must endure the impact of significant drops, withstand the risk of it going to zero, reject the small temptations during this process, and only then might we reap the big rewards.

Among these two points, the first point has a high element of luck and depends on personal insight, so not everyone can achieve it; but the second point can be done by anyone as long as we control the risk, invest small amounts that we can afford to lose, and endure the trials of human nature throughout the process.

This is also why I have frequently expressed this viewpoint in my past discussions and articles:

In a bear market, when we have already used some small positions that we can completely sacrifice to bet on projects that may yield high returns, as long as the project team is sound, we might as well hold onto it, completely ignoring the drops and small rises in the process, unless its increase has reached our expectations; otherwise, we should hold onto it until the later stages of the bull market before considering cashing out.

This is something that does not require luck and can be done by everyone.