Portfolio Management in DeFi

06/22/2024

One of the most important tools, probably the one to work on after you get your DeFi Wallet is your Portfolio Analytics tool.

Even if you get one, I suggest in the beginning tracking things via a spreadsheet or, worse case, a journal.

Things can get quite complicated because, unlike investing in stocks, tokens can be composed into other kinds of investment products.

For example, I may purchase ETH.

But then I convert a portion of this into Lido Staked Eth (stETH).

But then it seems like I can wrap this staked Eth to make it more liquid in the form of wstETH.

Being able to track what I did and when, at this point, is already complicated.

For example, if I have $10,000 USD.

This converts to say 3 ETH

2 ETH may then go from ETH to stETH.

So my static analytics would show:

1 ETH
2 stETH

This still may not seem that complicated for some.

But then I may have 1 stETH -> 1 wstETH

So now I have:

1 ETH
1 stETH
1 wstETH

But, to me at least, I may have purchased the ETH at a particular point in time with the cost basis for 3 ETH.

But the staking and wrapping could take place 1 month in between.

So already for me the dates are disconnected if the cost basis is changing.

(Note: I'm writing about these specific types of trades separately, this is just for illustration right now).

But then 1 stETH + 1 wstETH could go into a liquidity pool as a pair. So they disappear and I would get some kind of a token in return for the pair.

Don't know about you, but this is super complicated.

But I need a way to manage this.

I am using two tools right now (and still working out the details).

One of them is Coin Tracker.

The other one I am just starting to explore is Zapper.

I'm going to go into detail with each one, but here's what I'm looking for right now:

Accuracy across all chains, all tokens
Track actual growth, not just value at a point in time

Here's a screenshot of my use of Zapper:

!Zight 2024-06-22 at 4.44.51 PM.jpg

I like the interface from a clean way to see all of the assets that I currently have.

Liquidity pools are also displayed in an understandable way:

!Zight 2024-06-22 at 4.44.51 PM.jpg

I found that this we helpful for me to understand what I have and what is the "underlying" asset when they are in pairs for liquidity pools.

The Activity log is valuable to show a history of what transactions I made and when:

I think this is very valuable for the reason I described above: the static "current assets" view is harder when some assets are composed from others.

I suppose someone could argue that it doesn't matter, that the final end asset, quantity, and value is sufficient.

But I like having some kind of a history because, honestly, when assets didn't show up in the way I expected, such as having a liquidity token in my wallet, I had no idea where the funds ended up.

How you decide to manage your portfolio and your analytics will be an important part of your work flow, so figuring out what works best for you will be part of the journey.

Granted, it could change as you level-up during the process, but I think having something that is helpful in the early stages will help.

I'm going to do more thorough reviews probably as I go along my own journey, as well, and share the results with you.

Let me know what you think or what recommendations you may have below.