Hey Edge readers,

Last week, we talked about staying the course and having a plan. This week, we’re breaking down how. Markets move in cycles. Sentiments swing. Conditions change. The best investors don’t react, they follow a disciplined strategy. Below are four strategies you can use to build a more resilient DeFi portfolio in 2025.

Stay sharp. 🫡

-The Exponential team

Building resilient DeFi portfolios through a framework

DeFi isn't just about chasing the latest yield or jumping on trending tokens, it's about thoughtfully building resilient portfolios. By adopting a framework, you can align your investments with your long-term goals and personal risk appetite. While we believe markets will continue moving higher over the next year, a review of your current portfolio allocations can help preserve wealth amid macroeconomic volatility.

Here are four strategies you can adopt for your own DeFi portfolio:

1. Focus on generating yield

Yield is a powerful buffer against volatility, but not all yield is created equal. As TradFi rates start to normalize, the DeFi ecosystem is already feeling the effects. Benchmark yields for USD and ETH pools have both declined meaningfully from 2024 highs. What once looked like easy passive income now requires a more thoughtful approach.

As yields compress, protocols that optimize for risk-adjusted yield (not just the highest number) will stand out. In a lower-rate environment, the margin for error shrinks, and chasing raw APY without understanding the underlying risk can quickly lead to losses. Platforms like YO that optimizes yield across multiple chains and protocols to surface the best risk-reward opportunities will become increasingly valuable for DeFi investors.

2. Rebalance to maintain alignment

Strong market performance over the past year can subtly shift your allocations. Let’s say at the start of 2024, your portfolio was 50% BTC, 30% ETH and 20% stables, reflecting a moderately aggressive risk profile. But after a strong rally in BTC, your portfolio might now be 70% BTC, 20% ETH and only 10% stables. That’s no longer the risk profile you signed up for.

Rebalancing means trimming overweight positions like BTC and reallocating into underweight assets like ETH or stablecoins. This brings your portfolio back in line with your intended risk profile, reducing exposure to volatility while preserving gains. In DeFi, this may mean adjusting how you provide liquidity. When you deposit into a pool like ETH-USDC on Uniswap V3, you’re exposed to both assets within a chosen price range. If that range is tightly centered around the current ETH price, your exposure to ETH price movements (your beta) is high. This makes you more vulnerable to volatility and impermanent loss.

To reduce beta in your LP strategy, you might:

• Widen your price range to give your position more breathing room and reduce sensitivity to minor price movements.

• Set an asymmetric range skewed toward the stablecoin side. For example, instead of providing liquidity for ETH at $1,400–$1,800 (symmetric), you might choose $1,200–$1,600. This way, you’re mostly in USDC unless ETH drops, allowing you to accumulate more ETH as the price falls.

3. Manage concentrated bets

Many DeFi portfolios are built around a few high-conviction positions, but this can backfire if left unchecked. Holding too much of one token, protocol, or strategy exposes you to idiosyncratic risks, especially in a space where smart contract exploits and governance failures are persistent threats. Diversifying across protocols, chains, and strategies can make your portfolio more resilient to unexpected shocks. Holding too much stablecoins, especially without earning yield, can also slow down your long-term goals by leaving you underexposed when markets turn.

4. Defend against inflation

Stablecoins are great for capital preservation, but they don’t hedge inflation. If your entire portfolio is sitting in stables, you’re trading market risk for monetary erosion. To defend against inflation, consider assets that move independently of macro cycles. Historically, BTC and ETH have shown low correlation to traditional markets, making them useful hedges during times of uncertainty. They may not be perfect inflation hedges at all times, but in a world of growing sovereign debt and currency debasement, they offer exposure to harder forms of money.

DeFi is about building toward your long-term goals

Whether your priority is income, growth, or preservation, having a resilient plan helps you stay grounded through the noise. Markets will move. Headlines will distract. But with a thoughtful strategy in place, you’re not just reacting to the moment, you’re compounding for the future.

In the news 🗞️

• Bitcoin stalls amid Powell-Trump tensions. BTC is holding steady around $85K as investors weigh growing tensions between President Trump and Federal Reserve Chair Jerome Powell. Trump’s consideration of firing Powell raises concerns about central bank independence and market stability, fueling volatility across financial markets. Traders on Deribit are actively betting on bullish moves towards $90-100K while simultaneously hedging against short-term downside risk.

• EigenLayer rolls out key “slashing” feature. Ethereum’s leading restaking protocol EigenLayer has finally launched its highly anticipated slashing mechanism, designed to penalize malicious operators. This update aims to resolve lingering security concerns and fulfill EigenLayer’s initial promise of enhanced accountability. Currently securing over $7B in restaked assets across 39 active services, the redesigned slashing system ensures safer operations by isolating risks and preventing systemic vulnerabilities.

• Stablecoin transactions surpassed Visa payments in Q1 2025. According to Bitwise’s Crypto Market Review, stablecoin transaction volumes exceeded those of Visa in the first quarter, marking a significant milestone as crypto adoption accelerates. Meanwhile, Stablecoin market cap also hit a record $237B and tokenized real-world assets surged to $19B, led by growing demand for tokenized U.S. Treasuries, underscoring crypto’s expanding role in traditional finance.

Trending 📈