DeFi Summer 2020: When I Made $200K (And Lost Most of It)

DeFi Summer 2020 was the closest thing to a gold rush I've ever experienced. For about 4 months, it felt like free money was falling from the sky. I went from having $30k to over $200k in my portfolio. Then I watched most of it disappear.

This is the story of how I got caught up in the hype, made more money than I'd ever seen, and learned some expensive lessons about greed and risk management.

How It Started

June 2020. I was still licking my wounds from the March crash when I heard about this thing called "yield farming." The idea was simple: provide liquidity to decentralized exchanges and earn tokens as rewards.

Compound had just launched their COMP token, and people were earning 100%+ APY just for lending and borrowing. I thought it was too good to be true, but I threw $5k at it anyway.

Within a week, I had earned $800 in COMP tokens. My mind was blown. This was more than my savings account earned in a year.

The Rabbit Hole

Once I saw those first rewards, I was hooked. I started researching every new DeFi protocol that launched:

• Uniswap: Providing liquidity to ETH/USDC pools
• Balancer: Multi-token pools with BAL rewards
• Curve: Stablecoin pools with CRV tokens
• Yearn: Automated yield farming strategies
• SushiSwap: The vampire attack that paid off big

Every day there was a new protocol launching with insane APYs. 500%, 1000%, sometimes even higher. I was moving money around constantly, chasing the highest yields.

The Peak

By September 2020, I was making $2-3k per day just from yield farming rewards. My portfolio had grown from $30k to over $200k in three months. I felt like a genius.

I was spending 6-8 hours a day managing my positions. Checking Discord servers, following yield farming Twitter accounts, calculating impermanent loss. It became a full-time job.

The craziest part? I wasn't even taking profits. I was reinvesting everything, convinced that DeFi was going to change the world and these tokens would be worth 10x more in a year.

My Peak Holdings:

• $45k in various LP tokens
• $38k in COMP
• $32k in YFI
• $28k in SUSHI
• $25k in CRV
• $18k in UNI
• $14k in various other DeFi tokens

The Reality Check

October 2020 was when things started to change. The easy money was drying up. APYs were dropping from 1000% to 100% to 50%. New protocols were launching with obvious flaws and getting exploited.

But I was addicted to the high. Instead of taking profits, I started taking bigger risks:

• Farming unaudited protocols for higher yields
• Providing liquidity to extremely volatile pairs
• Leveraging my positions with flash loans
• Aping into every new token launch

I knew I was being reckless, but the FOMO was too strong. Everyone in the DeFi community was making money, and I didn't want to be left behind.

The Crash

November 2020. The DeFi bubble started to deflate. Token prices were dropping, yields were disappearing, and protocols were getting hacked left and right.

I lost $15k in the Pickle Finance hack. Another $8k when Cover Protocol got exploited. My YFI position dropped 60% in two weeks. SUSHI was bleeding value daily.

By December 2020, my $200k portfolio was worth about $75k. I had given back most of my gains and was barely above where I started.

What Went Wrong

Looking back, I made every classic mistake:

1. I Never Took Profits

When my portfolio hit $200k, I should have taken out at least $100k. But I was convinced it would keep going up forever. Greed is a hell of a drug.

2. I Ignored Risk Management

I was putting money into unaudited protocols, providing liquidity to volatile pairs, and leveraging positions. Any one of these could have wiped me out.

3. I Treated It Like a Game

The gamification of DeFi made it feel like playing a video game, not investing real money. The Discord servers, the memes, the community - it all felt like fun and games until it wasn't.

4. I Followed the Crowd

I was just copying what other people were doing instead of thinking for myself. When everyone is doing the same thing, it's usually time to do something different.

The Lessons

DeFi Summer taught me more about investing psychology than any book ever could:

Unsustainable yields are unsustainable. If something is paying 1000% APY, there's probably a reason, and it's not going to last.

Take profits when you're up big. I should have taken out my initial investment plus some profit when I hit $100k. Would have saved me a lot of stress.

Diversification includes time. Don't put all your money to work at the same time in the same sector. DeFi was hot, but it wasn't going to be hot forever.

Community can be dangerous. Echo chambers make bad decisions feel smart. Sometimes you need to step back and think independently.

Where I Am Now

I still use DeFi, but much more conservatively. I stick to established protocols like Uniswap and Compound. I never put more than 10% of my portfolio in DeFi at any time. And I always take profits when I'm up significantly.

That $75k I had left? I DCA'd it into Bitcoin and Ethereum over the next year. Much more boring, but also much less stressful.

DeFi Summer was an incredible experience, but it taught me that in crypto, what goes up fast usually comes down just as fast. The key is knowing when to step back and lock in your gains.

Not financial advice, just my expensive education shared. DeFi can be profitable, but it's also extremely risky. Never invest more than you can afford to lose.