David Van de Walle

Sep 23 2020

DeFi Fever: Catch It!

If you’re having a hard time keeping up with all of the DeFi (Decentralized Finance) developments, don’t fret: so are we.

Seriously: we saw a thing on Telegram inviting us to join Pancake and we, too, were wondering WHY DO THEY ALL HAVE TO BE ABOUT FOOD!

Alas and alack, here are three more DeFi platforms to consider; though one isn’t about food and, to readers of this space, won’t be a complete mystery.

REMINDER: Do your own research. We’re not responsible for your success or failure. We hope you get rich and make mad bank, but you could also get rekt. Seriously, study this stuff closely — and be prepared to lose your entire investment.

Pickle: Does It Do Anything Interesting?

Pickle announced its intentions in a Sept. 10 post on Medium: “to bring stablecoins closer to their pegs using farming incentives, vaults, and governance.”

About that “off peg bad” stuff, here, from the Medium post, is the team’s motivation:

So there you have it…stability! A more stable stablecoin for a better world!

Or something like that…with the volatility in the first eleven days, it may take some time for the “peg” to be, well, pegged.

Watch this space for more developments; we haven’t invested in $PICKLE yet, but some of our DeFi “degenerate” colleagues have.

How About Pancakes?

This one comes with a couple asterisks: $CAKE is too new to rank on CoinGecko yet and it’s also on the Binance platform. The latter means that we can’t experiment with it yet at HQ because we don’t have any assets on the Binance platform.

ALSO…

In addition to wondering why these all look the same, this one doesn’t inspire a ton of confidence yet:

Once they get the “test” off of the site, we’ll let you know what we learn.

Biggest Non-Food DeFi Development: MCP3D’s $MEGA

This probably deserves its own blog post; but we wanted to make sure this got out before what could become a feeding frenzy.

MegaCryptoPolis, MCP3D for short, is a gaming platform that’s like the Sims. We have written about it a few times in the past; and in this post we felt like we were one of the early adopters on the cusp of something that was about to become huge. Well, the economy within MCP3D lets you use resources to build things, and you can create those resources by actions of your citizens (say, getting one of them to run a power plant).

That economy will soon — as early as tomorrow — let you trade these resources, put them into a vault, and collect the $MEGA token. You can read about these developments in the company’s post on Medium.

We’ve been a fan of this for quite some time — there’s tremendous potential if you’re into the gamification of these crypto communities, and combining the DeFi world with the Sims-type world may be huge.

Or MEGA.

Again, watch this space for more developments and, if you’ve got something to share in this world, let us know!

As always, stay safe out there. DYOR.

Sep 13 2020

Three More DeFi Experiments

After spending the better part of the past couple weeks grazing at the menu of #DeFi options — why are they all seemingly named after food? — we decided to conduct another experiment. Here’s a plus/minus analysis of three of them: $SUSHI, $SHRIMP, and $KIMCHI. Hungry for more knowledge and really stupid food puns? Time to dig in.

$SUSHI: High Potential Platform

One of the most compelling reasons to check out Sush i is its head-on challenge to Uniswap. Let’s say you’re one of the OG LPs in DeFi — “Original Gangster Liquidity Providers in Decentralized Finance” — and you want to maximize the fees you collect from providing liquidity. Uniswap had you covered until it was forked — or, more accurately, copied — and Sushi was born, but with a twist.

The folks at Decrypt explain what happened much better than I can; suffice it to say Uniswap offered few benefits other than the trading fees, so Sushi stepped in.

All this backdrop — and the back-and-forth between the creator and the community, culminating in the appearance of shady backroom deals and the payback of $14m in ETH — doesn’t impact our experiment too much, though; we’re in it for the APY and the possibility of decent passive income.

Our Experiment: A Few Hundred Bucks and a $SUSHI/ETH Pool

He looks friendly, let’s see what he’s serving…

In order to invest, we followed this process:

Take $ETH and go to Uniswap*
Find $SUSHI by adding the Sushi token on Uniswap, which we needed to do by copying and pasting the contract address; you can find it at this link: Sushi Swap Contract.
Swap the $ETH for $SUSHI (this is where you actually buy it) but leave enough $ETH to both pool with the Sushi AND pay for gas fees (at the time, we were paying $5 or so a transaction).
Now, do that “Pool Thing,” which is where you “Add Liquidity.”

* we invested using Uniswap, but now you can just go straight to Sushiswap.org and click on the “Exchange” tab. This is what you’ll see.

If you follow all of these steps, you, too, can become a Liquidity Provider.

That estimated APY has come way down, actually, in the past 24 hours; we were experiencing an APY that was around 1000% up until yesterday. Here’s a screenshot from just a bit ago:

We’ll continue to watch this one; the fact that the interest thrown off so far by our holdings, in the first week, added around 8% to the value of our LP tokens is nothing to sneeze at.

So Then We Got Hungry for $SHRIMP

This one, Shrimp.finance, deserves a warning label: Votalite as Heck. You could lose everything. AND, because we still haven’t figured it out completely, it is VERY SLOW to tell you if you’ve actually gained anything.

To wit, we invested in this one and held for about 24 hours before we tried to “harvest” our earnings. When we went to harvest, nothing was there beyond our original investment.

Our investment, however, is part of one of the “Advanced Pools,” screenshot below, and we believe that might mean that our investment needs to be held for 7 days before we see what our APY actually turned out to be.

Time to talk about math, too; or, time to talk about our understanding of the math involved. For instance, when we first saw this pool, the APY was estimated to be something like 300,000%. We think this was calculated by figuring out that the TVL in this pool was de minimis and the 3000 Shrimp thrown off to one user would amount to 821% interest per day (or 300,000 divided by 365).

When we got in, the interest level immediately dropped — though it was still a tidy 25,000%.

Math tells me that was on track to earn 71% a day, until someone else jumped into the pool…

It has dropped to 21% or so per day — two days after we jumped back in, so we’ll play a wait and see approach and find out when and if we’ll get the interest added, and, if our math is semi-correct, how we’ll benefit. (71 percent added each of the first two days, then 21 percent added for the next few days; we’ve promised ourselves to wait until the 18th, when it has been a week, to see how interest is credited.)

Note that the volatility also calls into question just how much money this will add up to: when Shrimp launched, on Sept. 4, its price was reported at $2.65. Its own website gives the price as of this writing at $0.516, while CoinMarketCap says it’s more like 79 cents per.

As they say, “watch this space for more.”

If You’re Really Hungry, Add $KIMCHI to Your Meal

Kimchi has the potential to be quite lucrative for us; it also has the potential to blow up completely in our faces. Time for this reminder to “DO YOUR OWN RESEARCH” and not to use any of this as investment advice.

We got into this one in part because we just needed to add one additional token to our repertoire: $KIMCHI. We could have gone with one of the other liquidity pools on the page, but, in this case, all we had to do was follow similar instructions above and use some $ETH we found under the couch cushions.

Here’s this morning’s interest rate:

Over a year, 23x your original investment.

After we bought the $KIMCHI and pooled it with our $ETH (on Uniswap; remains to be seen if they’ll add other platforms, especially with Sushi’s developments this past week), we ended up with around $520 worth of investment in the pool. (NOTE: Gas was expensive when we first tried this, and, even at $5 per transaction, you want to maximize how much you invest and minimize withdrawals.) Here’s what our stake looks like now.

Is it possible that we’ve already made around 6% interest on our original investment? Yes, it is entirely possible.

It’s also possible, given the low-ish “TVL” on the platform, and the sub-7-figure value of the coin itself, that this thing will continue to languish for the foreseeable future.

Or it could pop. What should the market capitalization be in relation to the total value locked? If you take $YFI as an example, the token’s market cap is north of $1 billion, but the TVL as reported by DeFi Pulse is below that. Even at a 1/1 ratio, you’re looking at a 3x growth from here in the coin’s price.

Let’s Watch This Unfold…

We’re probably best described as anxious when it comes to these platforms. Not sure what to expect, and, again, it’s an experiment. Could end up being a delicious meal, or we could have indigestion. Or worse.

Aug 29 2020

When You Realize You Should Have Bought More

Every time you check the price of yearn.finance, or $YFI, it seems to be markedly higher. Here’s a price from yesterday.

Then here’s a price from earlier this morning.

Later on…

Just a few minutes later…

What in the world?

We’d Like to Say We Called It…

When we talked about the growth of the #DeFi space recently, we pinpointed three platforms that we think showed promise. Meta ($MTA) and Curve ($CRV) were the other two, and we locked in on those and plan on “setting it and forgetting it.” (Neither of those, we think, will see the type of exponential growth that has been shown by $YFI; supply may keep both of those coins from going crazy.)

(Here’s another screenshot, from 10:45 a.m.:)

Our reasoning for buying YFI was that it was being used to “lock in” assets, coupled with other coins — a cornucopia of options, it seems — to maximize yield. Token holders are rewarded with a share of the trading fees that is proportional to their holdings.

Let’s take a screenshot, do some math, and tease this out…

That’s a daily figure; whether the average fees are like today’s fees is a BIG question. Still…

The fees — 0.3% of each transaction — appear to be somewhere around half of that figure on an average day. But our $1 million example would get its share based on its percentage of the liquidity provided, so numbers could actually be higher on an average day. (August 17, very quick scan, tells us that liquidity was only $6 million or so that day, so a $1 million stake would have netted $5934 in transaction fees.)

WHAT?

No Matter How You Slice It…

We posited a guess recently that the value of this platform, based entirely on a calculation of 30,000 tokens divided into $1 billion market cap, was $33,333 each.

Turns out, if the platform keeps getting used to trade with these insane volume levels, we may have to revise that upward.

Reminder: Do Your Own Research. Not investment advice. We’re not responsible for you gains or losses. We hope you have plenty of gains.

If you need to get started in crypto, visit this link to Coinbase and, if you make a qualifying purchase, we’ll both get a bonus. Enjoy.

Aug 23 2020

Should You Invest In Something You Don’t Understand?

There used to be an adage in finance and investments that you’re best investing in those things you understand. This is why, as the (possibly apocryphal) story goes, Warren Buffett bought Dairy Queen: he understood ice cream and the franchise model, and “got” the concept immediately.

Warren Buffett is also old.

These days, the markets are dominated by Robinhood investors, by youngsters with a dollar and a dream, and by speculators hoping that Hertz will go up from pennies to dollars simply because pennies are cheap and dollars aren’t.

The Market #DeFi -es Logic

That’s deliberate, what we did with the subhead: logic is possibly defied by the decentralized finance market, colloquially known as #DeFi. Decentralized platforms — coins? tokens? businesses? not sure WHAT to technically call them — have entered the market and gone from zero to OMG in a few short months; one of these #Defi #Darlings (yearn.finance, or $YFI) has rocketed from 800 bucks to $13,000 in four weeks.

DAI token earning 50% interest — Is this an actual interest rate?

The screenshot above is from the Yearn website, and, specifically, the “Vault” tool on the page, where you can upload you coins — above is a DAI Stablecoin — and leave them there and make 50% interest. Right?

As we told you a couple weeks back — here’s the post on the Liquidity Machines Going BRRRRR — we were brand new to the concept of “yield farming,” and “liquidity machines,” and “stablecoin lending,” and interest rates that are straight up fire.

We had a couple ideas in a subsequent post (The Oldsmobile of the Crypto Market) for platforms that *could* catch fire; but, in the same breath where we told you to “do your own research,” we were doing our own research.

And we’re still not sure how it all works.

Curve Liquidity Provider token earning 97% interest — Only 97 percent?!?

However, we have picked up a couple of things — and we thank a couple of power-DeFi users, who we’ll talk about later — so we thought we’d share some of the knowledge here.

First, Think About Your Bank

It’s actually quite fun to think about this Defi space as the equivalent to a bank: if you want to break into the top tier of banking in the US, you need to have trillions of dollars in assets. Like this, from a chart from MX.com, showing the top 5 banks.

Top banks by total assets. — You probably bank at one of these institutions, America.

Obviously, this counts your money and my money and everybody else’s money in this list; lots of deposits, lots of withdrawals, and maybe a few mortgages and certificates of deposit and car loans and…the list goes on.

The banks above make their money from interchange fees — the tiny percentages charged for transactions — or from banking fees — gee, why does my bank charge me $5 monthly just to keep my money there? — or from the margin spread between what they lend at and what they pay in interest.

(A truism from community banking way back when was the “3/6/3 Rule:” Pay 3% in interest on savings, charge 6% in interest on loans, and be on the golf course by 3:00.)

These days, you need a lot of money in your vaults — I mean on a ledger somewhere, because it’s all a line entry on a computer spreadsheet — to really make it as a bank.

So, if we want to compare banking to Defi, how do we do it? Probably with a metric called “TVL,” or “Total Value Locked.”

We’re Just Getting Started

The website Defipulse.com has a great chart of where the industry stands when it comes to how much value is locked up in these decentralized finance platforms. Hint: It’s the top of the first inning and the pitcher hasn’t even faced the leadoff hitter yet.

Locked and Loaded?

Hardly enough is locked to even be ready to begin to just start to think about scratching the surface: $6 billion is nothing to the big boys or even the not-so-big boys. So it’s still really early.

Again, this is not financial advice, do your own research, and don’t invest more than you can afford to lose; but if you’re ready to start learning, we highly recommend resources from a chap called “Defi Dad.” One of his videos, on the site “Bankless,” is below.

Top of the First…Who’s the Leadoff Hitter?

If we’re just getting started and we think about this as the top of the 1st inning in a nine-inning game — and we think about DeFi as the visiting team playing against the Big Banks — we need a leadoff hitter. We need our Rickey Henderson.

For the uninitiated, Rickey Henderson was a baseball Hall of Famer who led off the first inning for his team by hitting a home run 81 times. Second-best on the list, Alfonso Soriano, did it 54 times.

(Dexter Fowler led off the top of the first with a home run in Game 7 of the 2016 World Series for the Cubs, but I digress.)

Had to share…

Anyway, if we’re going with our Rickey Henderson in this space, it has to be $YFI.

TVL $1,040,341,676https://t.co/JiHslRvOmq pic.twitter.com/SoZfX2GT8T
— yearn.finance (@iearnfinance) August 22, 2020

Positive development for $YFI.

If you want to learn more about Yearn.finance, we suggest checking out this site: learnyearn.finance. They’re bullish as heck about the coin itself, and — while encouraging you (like we will) to “do your own research” — they make the case that the price of $YFI is possibly way undervalued.

The Flippening (Kinda) and Warren Buffett

Hey, let’s get back to Warren for a hot second as we wind up this post. One share of Buffett’s Berkshire Hathaway is $311,000. He hasn’t split the stock and doesn’t plan on splitting the stock.

Earlier this week, the price of $YFI exceeded the price of $BTC; while it’s not a “flippening” in that the market cap of YFI is dwarfed by the market cap of BTC, it’s still a psychological victory.

And, with the total number of YFI tokens capped at 30,000, with no more ever to be minted and 99.87 percent of the tokens circulating, if Yearn’s market cap were to get to 1 billion, that implies a price of $33,333.33 per token.

Bullish Case

If you aren’t convinced that we’re early in Defi, we suggest you check out the resources we’ve listed, do your own research, and strap yourself in.

In any event, DeFi is just getting started.

Speaking of getting started…

Here are a couple CLEARLY MARKED AFFILIATE LINKS, in case you want to buy a little of crypto to get into the game:

Crypto.com has a good chunk of the coins and you can tie them to their debit cards, which are pretty nifty;

And Coinbase.com will also get you started and is simple to use.

Both give bonuses to us with qualifying crypto purchases, and those bonuses help us keep the lights on, so to speak.

Aug 04 2020

The Oldsmobile of the Crypto Market

Back in the 1980s, Oldsmobile came out with a pretty clever ad campaign, using a slogan “this is not your father’s Oldsmobile.” Here’s one such ad and it’s a fun 30-second investment of time.

That ad is kinda cool for me to see, for a couple of reasons. One: the dashboard and its electronic numbers, now standard everywhere, were ahead of their time, and it seems as if everyone I knew had a car with those display numbers at some point in the late 80s or early 90s. Two: my Dad talked often about his all-time favorite car, which was a Cutlass Supreme. It was a late 60s or early 70s model, so this ad is showing something that is not *my* father’s Oldsmobile, natch.

Enter DeFi, and $YFI

After a busy couple of weeks in the Bitcoin, cryptocurrency, and (especially) DeFi spaces, it’s now obvious that “this is not your father’s market.” We talked about the concept in our post about Liquidity Machines; it’s obvious that it’s the Wild, Wild West (Kool Moe Dee version preferred), and there is quite a bit of new-sheriff activity happening just about everywhere.

We thought we’d outline just a few real-world examples — “ripped from the headlines” — that we are trying (again, we like experiments) with our own portfolio. Our first one is no surprise: Yearn.Finance, ticker symbol $YFI.

YFI burst upon the scene two weeks ago. It has had quite the run. See chart; drool.

What’s most amazing about this coin is that the founder, Andre Cronje, has said that the YFI coin has no value and that he’s building tools that might have bugs in them.

Disclaimer: when I build software, I build it for myself. If you do insist on interacting with it, please use caution, there will be bugs. Interfaces are built to make my life easier. I will make mistakes. If you don't understand it, please don't use it.
— Andre Cronje (@AndreCronjeTech) March 5, 2020

Andre’s pinned tweet

No matter: YFI is the yield-farming technology that underpins so many liquidity swaps that even if it is deemed by the founder to have no value, it does actually have value. Quite a lot of it. Plus scarcity: only 30,000 of these will be created.

Using stupid-simple math, if this becomes a $1 Billion platform, each coin will be worth $33,333. Financial pundits call this an “asymmetric bet.” And it’s one we’re willing to make.

Of Course, We’re Also Investing in Meta

Funny enough, I first saw this platform in a tweet and the platform looked slick as heck. Here’s a Medium post explaining more: Medium Post on Meta.

Oddly for us, we had a tiny tiny stake in Balancer — at least a couple months ago — but decided to focus other opportunities, so we moved away from that platform.

What makes this one unique is its goal to insure users against the instability of dollar-pegged stablecoins as one side of a liquidity pool. Other coins talk about risk of loss of the value of a stablecoin were it to fall significantly below zero; with questions about coins like Tether commonly brought up, the potential for a loss is real. As explained by the token team:

This, to be honest, is purely opportunistic: low “market cap” right now, huge upside, and worth watching. (YMMV, DYOR, all that stuff.)

Nice name, logo. And the project is cool, too.

Finally, Watch for Curve

Curve is lurking in the background somewhere, waiting to launch its token. Curve has invested in Yearn, and, if there’s ever an asset that may very well pop almost instantaneously, Curve is possibly it.

Here’s a snapshot of Curve’s current pool APRs and its volume:

Whales are already using Curve and have been since earlier this year — cumulative volume on the platform has exceeded $1.5 Billion — and there’s thought that Curve is possibly “The Next Big Thing.” This is because, as with other platforms like it, you’re adding liquidity to pools and sharing in the trading fees.

(Speaking of “The Next Big Thing,” though, we should caution everyone that we were told in 1988 that Bros would be the next big thing in music.)

When the coin is released — “any day now” — only 2 million will be released each day. Scarcity will set in. Volatility is almost assured — so you’re really going to be on a roller coaster here. But that roller coaster, like the rest of the coin- and token- and liquidity-driven assets, could give you a nice pop. OR…well, you could end up like the career of Bros.

Or like the Oldsmobile: a relic of the past, a nice story about the growth of automobiles, and a defunct brand name.

CAVEATS

As with any and all of these, what are the lines you should keep in mind? “Bet with your head, not over it.” “Don’t invest more than you can afford to lose.” “You may get rekt.” And “this website is not investment advice.”

Good luck. Happy Liquidity.