What's wrong with a little APY?

So earlier this year around February, many altcoins were performing quite favorably. I had several of them providing liquidity on DEXes earning 20% APY or more while the value of the coins continued to appreciate. The sight of these profits filled my brain with dopamine and serotonin, and an overall feeling of success and intelligence at having found such a great strategy for making money.

Now, having just gotten through the nightmare of 2022, I did consider the fact that perhaps this rally could be short-lived. Analysts on Twitter were saying that we were just experiencing a bear market rally, and that things could go right back to where they were. And I considered that what they were saying might be true. Crypto moves in cycles after all. It would probably be a good idea to just take my money and wait for a drop later to buy back in.

But I was ultimately convinced to not sell because of my emotional attachment and silly rationalizations. "What's the worst that could happen? Everyone loves these coins now. We've already experienced the lows, so there will most likely just be a little dip. And since I am earning APY on these assets, I will still be profiting in the end once their value goes up again."

However, there is a big problem with providing liquidity with altcoins (aside from potential hacks and impermanent loss). Their value NEVER stays high for long. If you look at any altcoin chart, or god forbid a DEX token or lower market cap project, you will see that not a single one has stayed at their higher prices. People who buy into these projects are only there to make money off the hype of an initial pump, and then mercilessly dump them. I made the huge mistake of becoming emotionally attached to these coins and tokens, and thinking that everyone else was as attached as I was.

A little dip soon became a huge crater. A little selling became a mansion-sized yard sale. What was once worth $1 is was now worth 10 cents. Don't ever doubt the power of the market to completely destroy the value of your investments, especially if they aren't in something with a long track record like BTC or ETH. If you are ever asking yourself "how bad could it get to just provide a little liquidity and earn APY on my favorite coins?" Pretty damn bad my friend. Stay safe out there.

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