Foresight Ventures: How to leverage small investments to challenge the blockchain underdogs?

Written by: Jonas, Foresight Ventures

1. What is a "Doge"?

On-chain "Doge" typically refers to early projects without a project white paper and with very shallow token trading depth. The decentralization and low barriers of DeFi have allowed many quality grassroots projects to develop rapidly, while also providing a convenient harvesting environment for ill-intentioned individuals. Most Doge projects are fleeting, with a lifecycle of 1-3 days. Only a few Doges can achieve hundredfold or thousandfold returns and become "Golden Dogs" listed on major exchanges. Even so, many people can consistently profit a hundredfold from Doges each year, indicating that expertise matters. Chasing Doges is essentially a game of probability.

2. How to Operate

Here, we take the ETH chain as an example. After long-term observation, although the gas fees on the ETH chain are high, the wealth effect is more pronounced. Other heterogeneous chains like Solana and Avalanche have relatively weak market sustainability.

2.1 Finding Doges:

First, trading websites like dexscreener, defined, dextool, ave.ai, etc., have continuously updated trading hot lists. Projects with high trading volume and significant price increases rank higher; only projects with trading volume have a future.

Secondly, use bots to monitor on-chain behavior. Common bots include pepeboost, alpha radar bot, nerdbot, etc., which can push real-time trading data trends. These bots have simple interfaces and analyze comprehensive scores based on contract security, liquidity pool, number of smart money addresses, etc. Selecting from the high-scoring projects pushed by these bots can yield significant results.

Finally, follow smart money addresses. The more smart money addresses that buy a Doge, the higher its reliability. There are many professional smart money addresses that can consistently profit $100,000 to $300,000 per month, with an average profit ratio of 30-50%. Be sure to exclude the project team's own wash trading addresses and addresses that occasionally hit the jackpot, focusing more on those that can consistently buy Golden Dogs.

2.2 Buying Doges:

First, controlling your position is crucial. On average, there are 1,000 Doges daily, but only 10 are worth short-term trading. Treat it like a casino, placing multiple bets of the same amount in the game. For example, set a daily purchase of 3-5 Doges, with each purchase not exceeding 5% of the total amount. For Doges with larger liquidity pools, the position can be slightly larger.

Secondly, use market rules to improve the win rate and risk-reward ratio of trades. Chasing Doges is often a game where you lose money most of the time and make money only occasionally, somewhat similar to venture capital. For example, among 10 Doges, 8 may incur losses, while the remaining 2 must recover the costs of all 10 projects and still make a profit. Cut losses short and let profits run. Some useful rules include:

Imitation rule: A successful project will attract a large number of imitators, and the second and third-tier projects are likely to be profitable, while later imitators may start to run away. For example, after PEPE became popular, PEPE 2.0 also surged a hundredfold. After the Bitcoin Harry Potter became popular, Harry Potter XRP also surged a hundredfold.

Timing rule: In the long run, when the overall market is good, an average of one hundredfold Golden Dog emerges every week; when the market is poor, an average of one hundredfold Golden Dog emerges every half month, with the beginning and middle of the month particularly likely to produce Golden Dogs. In the short term, most Golden Dogs appear between 1-3 AM and 5-8 PM, with a few appearing between 9-10 PM.

A few Golden Dogs often contribute 90% of the portfolio's profits. A good Golden Dog is often associated with a hot event or repeatedly mentioned by big names. For example, GROK, as Tesla's AI product, was repeatedly mentioned on Twitter by the world's richest man, Elon Musk, attracting a lot of traffic. There are also good Golden Dogs that resonate with culture and provide emotional value, such as BONK, which originated from a satire of SBF and united the Solana community during a low point. Golden Dogs that meet the above standards can be held long-term; common standards include: on-chain holding addresses exceeding 8,000, daily DEX trading volume exceeding $8 million, Twitter views exceeding 8,000, Telegram group members exceeding 10,000, etc.

2.3 Selling Doges:

80% of Doges go to zero on the same day, and 99% go to zero in the long term. The reason smart money addresses have a high win rate is not that they only buy profitable Doges, but because they run fast. The Doge market operates at ten times the speed, with doubling and going to zero often occurring within minutes. Some common selling standards include: K-line trends showing significant deterioration, a decrease in the 24-hour turnover rate, and a slowdown or even decline in the number of holding addresses. For Doges without actual projects, unless market enthusiasm is high, it is not advisable to hold overnight.

3. Risk Warning

3.1 Gas Fees:

The Doge chasing strategy is suitable for volatile markets but not for bull or bear markets. Chasing Doges is difficult to avoid gas fees. Taking the ETH chain as an example, currently, each buy and sell costs tens of dollars, while the actual amount chasing Doges may only be $100-200, significantly reducing the risk-reward ratio. If it enters a bull market, the cost of a single transaction on the ETH chain could exceed a hundred dollars, making chasing Doges unfeasible.

3.2 Wallet Security:

With rampant on-chain hacking, it is advisable to isolate funds used for chasing Doges from main funds and to change wallet addresses regularly.

3.3 Profit Withdrawal:

Use the profits wisely and protect your capital. Money from chasing Doges comes quickly, but it also goes quickly. It is advisable to regularly withdraw a portion of the profits to serve as capital for future comebacks.

Bruce Lee said, "I am not afraid of the man who has practiced 10,000 kicks once; I am afraid of the man who has practiced one kick 10,000 times." Finally, I wish everyone great success in chasing Doges with hundredfold or thousandfold profits!