Three initial main points:
- Crypto excites me and is completely natural to me by now.
- I confidently know how to make money in crypto across various mediums.
- I don't like USD and don't want it in my bank account unless it's going to be spent immediately.
Framework:
During the last bear market, I figured that earning 7-8% interest on stable coins would be my strategy once I sold towards the end of the next bull market. No rocket science here. Given my limiting geography, I wasn't aware of a better option and was content with that end game.
Hopefully I didn't hold through another recent top to miss that chance as prices continue to slide down...
At the time, a steady 7-8% seemed like the best option since I don't want fiat and was timid about using crypto as collateral to borrow against. Stable coins earning simple yield would do the job with minimal risk, while also allowing me reaccumulate holdings during the bear cycle.
Fast forward to now after getting deep in decentralized finance (thanks to several airdrops with huge incentives that gave me no choice but to engage), opening my eyes to its ongoing potential. Once you see the light and how efficient it is to grow your holdings, it's hard to unsee it.
Now I won't go into extensive detail about past airdrops, but many start off with staking and liquidity pool APRs well above 500% that decay slowly as these incentives attract more money. One of my last ones was cruising at over 800% when I started and is still earning 525% now. In a short time, I've grown the total token amount by 25% and extracted almost the entire airdrop sum out into UST. This was a small sum to start, but it didn't have to be. I just chose to play with my free money, but it'd have been easy to move real funds in and enjoy the same rates.
In short, you don't need a lot to make a lot when you compound high yield interest. If you pick your spots and recognize that many of these airdropped coins and/or yield opportunities have active Twitter accounts, strong Discord channels, and even steady Medium posts, you can get a sense of which the right ones are to engage (versus take the money and run). Sure, there is always smart contract risk, but again, researching and choosing wisely is part of the equation.
I should clarify that much of my experience has been on the Cosmos ecosystem in 2021, where airdrops have been generous and often based on staked ATOM, OSMO, and JUNO. I've also dabbled elsewhere, but this network is highly interconnected, cheap to use, and personally trusted. If you're unfamiliar with the first two tokens there, I highly suggest catching up to speed as these should not be ignored. IBC and Tendermint Protocols are not to be brushed under the rug. Interoperability is vital, and I've seen it blossom first-hand. There is much more runway to go as these ecosystems develop and integrate rather seamlessly by sharing protocols.
As I've said a few times, HIVE devs who think this isolated chain is the the best-in-breed and end-all-be-all savior for Web 3 need to think bigger and realize that we're light years behind on interoperability. That's likely where things are going.
One main reason why I didn't use AAVE, YEARN, CURVE, etc.. was that I really didn't need to. I saw little value in trading my offline holdings or even online holdings for the tokens to use there, realize taxes, and gas fees, just to make 5-13%... Even if I made 30%, I have far more than that at my fingertips in an ecosystem I'm extremely comfortable in, and where a solid stable coin (UST) is also available to earn 19-20%! It's a no-brainer for me here.
Back to the main topic:
With many streams, I've been meticulously tracking every crypto operation since the start of the New Year. This has helped me realize what's coming in daily because I can easily tally it. I'd previously kept records in a diary format, but didn't tally things up much. I simply treated each operation as being related to itself, and usually decided to compound the interest for the long run. Some here. Some there. It was nice, but I was in a reinvestment mindset. Price didn't matter. This decision was the right move then since many additional airdrops scanned these accrued gains to further snowball things. It was also before the prices started rising, and they've done very well.
Using my new tracker, and despite crypto prices generally being down, the Cosmos ecosystem has really stood out of the pack. I believe that more people are realizing the value of staking their airdrop-eligible tokens, are happy that its latest upgrade is complete, and see the enormous value of cross-chain interoperability. Nobody knows, but I do know that their ecosystem is growing and onboarding new chains as an increasing rate. This means more utility, opportunities, and value. ATOM has positioned itself to be at the Hub of that, quite literally. While token economics can be improved over time, it's on the right track.
The Dilemma:
Now my scenario is my own, and you have yours, but I'm likely not alone that it's becoming more of a reality that we may be able to live off our crypto. The alternative is comparing it to holding it as assets to buy and sell for profit. Buying and selling seems very crypto 1.0 to me and I'm tired of being dependent on manipulated market prices. What I can control are the interest rates I choose when I provide liquidity and network security via staking on chains I want to be a part of. I can predict and control the volume of tokens I earn, and that's a non-zero sum versus my offline holdings that are sitting still.
Are any of you here starting to come to this realization too?
The crux is that liquidity pools or simply staking in the right places can generate passive income that feels like it might be enough to consider flipping the switch and graduate to a passive income model. While I'm getting close, I think I need one notch more to feel good about it. But, for starters, it's cool to think that I can pay my rent with it if I wanted to. However, learning to part with my crypto versus holding and compounding it is another challenge.
More Trade-offs:
As I sell curbside items I personally salvage year around (going outside immediately after posting this in freezing conditions and snow), because I quit my job 7 years ago to do this for freedom/environmental reasons, it's tempting to put that hustle behind me and rest. The ironic part is that I'm considering this based on the yield from a small portion of my holdings, awarded via airdrop (excluding the UNI drop I swapped for another token). If I went full-passive, would I be selling out on the environment? Perhaps I'd be freeing myself from the financial aspect of it to enjoy it more, or even scale up without my boots on the ground (literally).
Also, while managing Defi doesn't take too much time during the day, researching crypto and opportunities does. I find myself lagging on the recycling/cash income side of things because there's not enough time in the day, and it feels very inefficient. A few wise financial decisions can generate a month's worth of hustle, and at some point, shouldn't I want that for myself?
Knowing what I've learned about the Defi space also has me questioning if I should still be holding most as blue chips long offline, not earning ANYTHING, and definitely not compounding. Sure ETH 2.0 will be here in another year (cough), and there's Lido for WETH, but is native staking at 4-6% really going to be stronger than 100%-500%+ today? I'm not trying to be greedy. I'm actually trying to determine if I'm making a mistake in not doing this. If I made the move last July/August like I mapped out, I'd be on Mars right now, but I froze because of my fear of realizing taxes before a potential move to a state/local tax-free place. Indecision and fear were the thieves of that opportunity. I still have the screenshot of the Excel projections and I just have to hit myself in the head for not letting the green (APR) win out instead of the red (taxes).
To be honest, APRs below 50%, aren't very exciting when I'm consistently getting a range of 90-500%+ on stable projects with real communities, Twitter accounts, and budding Discord channels. Defi is a special place while the rest of the world (and many even in crypto haven't thoroughly explored it yet). Also, most "risks" are more than justified by the returns, and I don't mean that in an overconfident way. If anything, the risk on some ecosystems (not all) is fairly low, while the returns reflect much higher risk. I feel that this is just the early-mover/adopter advantage playing out while most are uninvolved, or on larger and more popular platforms.
I'll keep riding these trains while the getting is good, and see little reason to fully unwind even if APRs drop to normal levels. I really like many of the projects and have watched them grow closely to trust that they're worth holding. This is the mindset that may keep many of these tokens stable in price or even rising, as much is locked and people would need a really good reason to exit at those yield levels. Sure, many tokens may be inflationary, but the issuance will recede over time. It's all still new and the tokens are being distributed.
As I wind this down, it's important to know that much of this is also facilitated by highly interoperable Defi platforms that work seamlessly together with barely any transaction costs. It's virtually free to use and has been reliable on a daily basis. While others are deterred by ETH gas fees and flock to L2, COSMOS and others offer virtually no such friction or expense. Other Defi platforms off of the ETH network are also in the same boat, but with their legit tokens not offering as high yields as the COSMOS chain. I still diversify there because it allows me to use my L1 tokens effectively and earn more than if I kept them in native wallets. I also learn and get exposure to new projects by being in the weeds, so to speak.
Lastly, as I try to see if it's better to reduce my man hours outside and for reselling for potentially a better way to generate income, my stable coin plan has also changed. As mentioned before, UST on the TERRA network yields 19-20%, and that will be my destination when the markets heat up again. I've started accumulating some for dips, but often spend it on in-game play-to-earn NFTs (even on Splinterlands too), which is another partially passive income stream I'm building from the ground floor. Splinterlands doesn't quite offer the yield at my Silver III level to earn funds there, but hopefully my land and cards can be leveraged in the future for some. There's definitely a lot of in-game earning potential on other chains and gaming suites that are attractive that I'm bridging into for the next phase of discovery. Until then, I'll keep playing with my Defi yield, spending it on future investments instead of risking new capital (playing with house money instead), and building up UST to use if the market continues to drop.
Outro:
As you can see, I've been fairly transparent to see if any of you can relate, have advice, or wanted to share input on how you've potentially approached the choice of going full-time crypto income (or not).
Hopefully you've explored a bit outside of HIVE. Please don't limit yourself and/or feel pressured to stay 100% HIVE or bust. You're not a traitor for doing so. If anyone sees you that way, they don't care about your well-being and are probably insecure. It's wise to diversify and educate yourself for the new financial system, not just Web 3.0.
P.S. All of this could be fiction and I only own HIVE. I can blog to earn all the passive income I need!
Thanks for reading,
@steemmatt
I have only started looking into Cosmos because Cronos from Crypto.org is compatible. I'm interested in exploring more as I have been using Cronos DeFi for borrowing against my holdings.
I agree that HIVE needs to be able to bridge to Cosmos. We would see a long-term benefit from being able to bypass exchanges. Although, the major disadvantage will be that transactions will have a cost, whereas HIVE has no transaction fee. Even so, we would have access to larger markets to swap for other coins and tokens.
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Osmosis has been my only way to get CRO so that jives with your route from the Crypto.org angle. The ATOM/OSMO LP pool has been very stable at about 95-105% lately. It was much higher before, but has been holding in this zone for a while. Osmosis is a great place to start learning about as a channel hub across many blockchains.
You're right about fees but the fees are so tiny. Free doesn't always mean better, and maybe Hive devs can be flexible to adapt.
I’m also in these insane APRs: right now doing Static-BUSD pool on Beefy which is at about 3% APR PER DAY. I’ve learned how important it is to track the underlying asset value because it can devestate your profit, and this one is stable or increasing in value. Amazing times we live in.
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Nice lead. I've tended to shy away from LPs lately because I learned my lesson on impermanent loss for one while the interest wasn't high enough to ease the pain. My others are stable and cruising at around 80-100% APR now that they've settled in after their launches. I've been fortunate to be at the onset of several new chains to catch high extremely staking rewards that feel a bit less risky than the pools for the above. I tend to prefer staking for now because it's also better for airdrop eligibility. Thanks for the comment.
That’s an excellent point, about staking for airdrops. How do you find out about these? Or so you post about them here? (Hint hint lol)
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Since I'm highly in tune with the Cosmos ecosystem, I've followed the right YouTubers, am in lots of Discord groups for upcoming projects, and also search around for more clues on the web that ultimately lead me to news/rumors on Reddit or Twitter. I don't really post about them specifically, but I've mentioned the general flurry of them on the Cosmos ecosystem a few times. There are a few general airdrop tracking websites you can explore and see if you may already be qualified for. An example is: https://airdrops.io/. There's also a website where you can put your ETH addresses in to see if you've potentially missed any free money in the past. https://earni.fi/
Basically, if you proactively search on a regular basis, they're pretty easy to find and prepare for in time as some take some setup, like setting up XRP trustlines. Many airdrops have airdrop calculator sites where you can paste your addresses in and see if you made the snapshots/how much you'll get when it's ready.
Here's a tip for Terra Luna: https://terra.smartstake.io/airdrops.
Fantastic, thanks so much I’ll take a look. Yeah Cosmos has been really interesting for years, time to spend more time seeing where I can invest. Much thanks for the detailed reply 🙏
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Going to bed now. Will reply more tomorrow.
I'm a sucker for passive income so I really like the theme here.
Because I'm pretty newish to the space, take this for what it's worth, but my thought is that huge APRs are only possible because the tokens are being diluted, which should put massive downward pressure on the price. Except, that demand has outpaced that increase in supply so it "funds" the dilution.
Once dilution (token issuance) stops, it would be impossible for those high APRs to sustain themselves long term, unless the platform itself is a massive cash flow machine. But then again, if those platforms become massive cash flow machines, investment dollars will follow them (just like they do in the stock market), and the high yields will be arbitraged away as investors pile in. It would be like buying Microsoft in 1995-- today you're making a killing on your initial cost basis, and have a huge Yield on Cost (or "APR on cost" if you like)-- but everybody knows Microsoft is king now and your yield if you bought today is less than 1%.
It's hard to differentiate which projects are in that cash flowing state versus which are just benefiting from demand outpacing the increasingly supply, at least right now. Personally I hope web3 moves towards more disclosure and even financial oversight so investors can feel more confident that there's real cash flow behind the tokens they invest in.
By the way, I think suggesting diversification is a very wise take, and you shouldn't apologize for doing so. Any community that's so religious to throw common sense out the window is not one to be apart of.
With interest rates on the rise now, risk-on assets are taking a beating and that trend doesn't seem that it will abate anytime soon.
It's just a classic market cycle, and good investors should be diversified not only inside of web3 but outside it as well-- even if they are extremely bullish on the technology. There's alot to learn from the dot com boom; so many similarities.
Very wise views here. I've generally ignored traditional finance, so I can't offer any balanced thoughts as you have, but get what you're saying.
Much of the inflationary crypto genre carries on as such for a planned number of years. Their "selling point" is that the inflation slows on a set schedule over time, and that it may even convert to a burn model later on. That's often just white paper token issuance/distribution pie chart stuff, as much is a money grab in my eyes. It's competitive out there and projects need to sell opportunity to attract liquidity. Usually, the returns on staking or liquidity providing decline as more capital comes for their slice of the pie, but this demand seems to chew up selling pressure by earlier adopters or those generally farming their yield.
Whether this is the case for some or all, a strong APR is all that over-enthusiastic crypto investors need to hear to feel like there's enough juice to squeeze for a while before moving on to the next one. I can't blame them though because it's better than the last bull run where these options weren't as available -- so it was just buying, holding, or trading asset pairs - versus more incentive to hold for the yield today. Ultimately, there's a lot more locked up now than before, so I don't mind this so much. Some project are merely a means to an end, while there are good ones to stick with.
I suppose the risk is super high, so the rewards match, whether the math behind it makes sense or not.
You're spot on, risk and reward are inevitably tied.
It is unfortunate that new investors are sometimes taken advantage of with a shiny new object like high APR. You generally can't really blame them for what they don't know about it; they see the staking rewards come in and think nothing of the big picture.
I really think the idea of these decentralized projects are here to stay. It probably will turn out like the dot com bubble/crash played out-- many investors got burned as companies went under, yet out of the ashes came Google, Amazon, Facebook, etc, with new fortunes made by investors who came in after the crash.
Microsoft again serves as a good case study for the typical innovation cycle. Buying at the peak in '99/'00 was disastrous for over a decade+ (never fully rebounded in price for a long time), but if you got in after the crash you've easily 10x your money and more.
What's great about being an early adopter is having the opportunity to potentially see those projects that emerge from the ashes before the general public does.
What makes it difficult is how quickly the world changes in technology, and how unpredictable outside forces can sometimes pick the winners and losers.
The antidote, probably, is diversification... also patience and discipline to dollar cost average through a brutal downturn (-80%, -90%, or even -95%+) in the context of a balanced portfolio, and humility and flexibility to invest in the emerging winners even if they aren't part of one's original portfolio (overcome sunk cost fallacy).
not true, you write to knowledgable and your dilemma is very relatable...
I have been enjoying nice returns as well and the end destination is also UST on anchor yielding a nice 20%
but too often there are dips to be bought and there goes the stablecoin reserve.
I do not really use the cosmos ecosystem but have a bunch on ETH, BNB, CUB and in NFTS... I know how you feel though. That ultimate goal to be able to live of the solid interest is so close but still quite far.
one more notch
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Can you please tell something about UST APR ?
I showed the APR. What else would you want to know?
Where are you getting around 20% APR on UST ca you provide the link of that platform.
Terra Station and https://app.anchorprotocol.com/.