Portfolio Allocation

As the theme of our site is compounding gains over time, we do not recommend an overly aggressive allocation to the riskiest plays. We take a balanced approach with most of your money in tier 1 and 2. Over time we expect to have a tier 2 heavy portfolio with tier 1 making up less and less of your portfolio % wise as your gains start to compound and you put more to work in the other tiers.

Lets say you have a 100k portfolio to work with. Over time we would expect this to be 30k in tier 1, 60k in tier 2, and 10k in tier 3. If you have a different allocation, your mileage may vary. You may not be fully invested at all times as there might not be enough opportunities at tier 2 and 3. You could park this in Tier 1 while you wait for opportunities to come up.

You can use this Tracking Spreadsheet Template to track your positions and your allocations.

Tier 1 – Safe money

30% of your total portfolio. You should start here to get comfortable with CeFi and DeFi.

As you collect interest, you can move it into tier 2. This tier uses mainly stable coins so there is very little volatility any easy to track in fiat terms.

Tier 2 – Excess of Safe Money

60% of your portfolio. Defi and more risky CeFi.

This is money that you could have tied up for an extended time that you wouldn’t need to access immediately. An example of this would be real estate or put into a standard investment account. The underlying assets we are comfortable holding for the long term like BTC, ETH, and other tokens for blockchains. You need to feel comfortable with a 90% drop in fiat terms on these assets and have conviction, if you don’t, stay in tier 1. We look at long-term plays and interest is paid in the same asset. When you have money invested across all tiers, this will be the largest portion of your portfolio allocation.

Tier 3 – High Risk Money

10% of your portfolio

This is “throw away” money that you can loose and not lose sleep at night. This should not exceed 10% of your portfolio. You should never commit more than 1% of your portfolio on each opportunity as we could lose here. You won’t be fully invested in the 10% at all times as there just aren’t enough high conviction ideas here in my opinion.