STRATEGY #3: DIVERSIFY AND HEDGE

😊Diversifying your portfolio is one of the most popular and fundamental tools to reduce your overall investment risk. A diversified portfolio won't be too heavily invested in any asset or asset class, minimizing the risk of heavy losses from one particular asset or asset class. For instance, you may hold a variety of different coins and tokens, as well as provide liquidity and loans.

😊Hedging is a slightly more advanced strategy to protect gains or minimize losses by purchasing another asset. Usually, these assets are inversely correlated. Diversification can be a type of hedge, but perhaps the most well-known example is futures.

😊A futures contract lets you lock in a price for an asset at a future date. Imagine, for instance, you believe bitcoin's price will tumble, so you decide to hedge against this risk and open a futures contract to sell BTC for $20,000 in three months. If bitcoin’s price does indeed fall to $15,000 three months later, you will profit fro…