Wow! What a crazy week it’s been since my last dispatch. For two reasons.
Firstly I want to say a huge thank you to everyone who has subscribed. I’m amazed at how fast my list has grown. I appreciate you all taking a gamble on me and I hope I can deliver something useful
Secondly, it looks like the bottom has dropped out of the crypto market. The big three coins have all lost about 25% in the last couple of days alone, although there has been a bit of a bounceback this morning. I don’t hold any BTC or ETH, so I’m not crying in my Corn Flakes, but see below for how it has affected my DeFi plays
By the way - if Gmail cuts off half this email, please just click on the title and view it on Substack - Thanks.
The Portfolio Update
To all those who saw the first dispatch, last week, I owe you an apology. The figures were all wrong! Thanks to Johnny Nezz who spotted it. I’d been so anxious about getting my first newsletter out on time that I didn’t check my spreadsheet. Rookie error.
That won’t happen again, I promise.
Performance notes*
My Diamond Team
MDT is turning out to be a bit of a, well… a diamond, I guess. I’ve been so encouraged, that I loaded another $200 in during the week and am considering more.
The returns have stayed consistent at around 1.73% per day, which is actually more than they promise, even including the little 5% bonus you get for compounding. Most reassuring of all, the contract value continues to rise. Here’s a graph to show how consistent that is.
Isn’t that a lovely straight line? Please keep going.
The only disappointing element is the terrible price of BNB which sagged below $300 overnight but has bounced back a little since then.
I’m holding tight to MDT.
Titano
I fear we’re seeing the last days of Titano. It’s still earning me just under 2% per day, but the value has slumped because it can’t keep pace with the plummeting price which, today is worth 11 times less than when I started.
Looks like everyone else feels the same because the contract value has more than halved. I’m not going to sell, because it’s not worth it. I’ll either let it die or hope that at some point it might recover a little.
Shame. I had high hopes.
SAFUU
I was bullish about SAFUU last week. Although the TVL had slipped, the price was holding steady. But now it looks as unhealthy as Titano. The TVL has dropped by a third and the price hit an all-time low, last night, before recovering to around $56, which is exactly what it was the day they launched, back in March.
I know the team have been marketing hard, but it’s going to be tough to attract new money right now.
I’m not selling, because I’m in the red, so we’ll see if they can recover some of their momentum.
Piston Token
Piston had a bullish week, right up until two days ago when the big freeze hit. The price seemed to be bucking the general trend and hit its own all-time high of $26 on Saturday. It has since retrenched to $19, but may be showing signs of holding at that.
There has been a bit of shrinkage in the TVL, despite my massive extra investment of $109. Was that a mistake?
Piston has a strong community around it and a lot of goodwill, so I’m reasonably confident, and I’m continuing to compound.
Baked Beans
It looks like BB has run it’s course. The dev team were busy marketing to SE Asia last week, but that is either being slow to take effect, or simply hasn’t worked. I suspect the latter, unfortunately.
BNB is down of course, so the returns are poor anyway, but the TVL is the most worrying aspect; reduced by a third since this time last week.
I confess, I’ve given up on Bake 6, Eat 1 and I’m cashing out my diminishing profits every day. I’ve been lucky with BB, as much due to referrals as to the daily return, so I’m sad to see it go.
PinkApple
I’m afraid it’s RIP PinkApple. My returns are less than a dollar a day now. I’ll be lucky to claw back a third of my investment, so I’ll be dropping it off the report next week.
PinkApple was a neat idea, with it’s own token as well as the BNB rewards, but it never quite made critical mass. I hope the dev team don’t lose heart and that they can come back in future with something better.
DRIP
DRIP is suffering from a double slap this week. The ongoing Animal Farm delay continues to depress the price: no good news is bad news for DRIP. On top of that, the general market misery is pushing it further down. For the first time since I originally invested 6 months ago, the price has almost fallen to below my buy-in at $16.50. Late last night it dipped to $17.29, but it has pulled back a little since then.
Forex may or may not relaunch AF this week, but I’m not holding my breath. Until he does, nothing is going to shift that needle in the right direction.
But, the daily 1% keeps accruing and as the pundits say, “the price doesn’t matter.”
DRIP Garden
Nothing new to report here. The LP value follows DRIP, and remains depressed. I’m planting and harvesting on alternate days and waiting to see if it recovers, or if Piggy Bank is going to steal its crown.
Two New Investments
Before the crypto world collapsed, I took some of my Baked Beans profits and jumped into a couple of new arrivals; Cosmik Finance and Baked Cats.
COSMIK Finance
I chose Cosmik because they have come up with two interesting ways to solve the sustainability problem. First, their Dynamic APY adjusts the percentage downwards if too many people take their rewards, too often.
And secondly, Dynamic Tax penalises large withdrawals, but to be honest, not by much.
I’ve only been in a week, so it’s too early to call, but the price has been affected by the market drop and so far my daily returns have not reached the maximum 2.286%, so I guess the Dynamic APY is working. Unfortunately.
Baked Cats
Crazy name. Crazy APY. Fifteen percent folks! I had to throw some of my mad money at that didn’t I?
Two things have impressed me so far. Firstly it’s BUSD in and BUSD out. Given the current situation, that’s a real plus.
Secondly, they employ an innovative carrot and stick algorithm to control our greed. The carrot is a rising bonus, up to an extra 30% of daily earnings added on, the longer we keep compounding. And the stick is a whacking great 60% tax for cashing out before we’ve compounded at least ten times.
It’s a clever approach, which might help them live a little longer. The TVL is rising nicely, but it’s still tiny at just over 100k BUSD. I’ll write more about this next week, when I have some more data.
(* please note, some of the above are referral links, but you don’t have to use them.)
What Could Possibly Go Wrong?
I said in the last edition, that I’d pick a different contract each week to do a deeper dive. And I will. But not this week. See! Already I’m lying to you :-)
With crypto crashing round our ears, I thought it would be worth a moment to step back and take a look at all the things that can go wrong in the shifting sands of DeFi.
Rug Pulls
This is the one everybody worries about, but is probably not the most common cause of contracts failing.
DeFi is the perfect hunting ground for the scammer, it has all the right conditions. It’s full of avaricious investors, looking for massive returns, prepared to accept high levels of risk, and happy to invest in projects with no safety net, no regulatory enforcement and very little evidence to back them up.
It’s easy for a scammer to build a simple contract, make a bunch of promises and leave a backdoor in the code. Even if code-savvy pundits spot the exploit, with enough hype there will still be plenty of hopefuls prepared to splurge their cash. And best of all for the scammers, it’s prefectly feasible to launch anonymously which would be impossible in any other field.
Exploits
The other predators scouring the landscape for easy prey are hackers, looking for weak contracts with glitches in their code. All a smart hacker has to do is figure out the flaw and bide theit time till the bags are big enough, then it’s off into the sunset with the loot.
Elephant and Splassive are two recent examples of aggressive exploits, which netted millions. Even the first version of MDT got slapped, though in fairness to all the devs involved in those, they have tried their best to make amends. Quite successfully, in some cases. So, all was not lost.
Failure to Launch
PinkApple is the classic example of a project with a lot going for it, but that still failed. They had a new approach, committed devs and a lively community, but just not enough momentum at launch. The TVL peaked within 5 days of the start date and went downhill from there. Despite the best efforts of all concerned, there was just not enough gas in the tank and now everyone is scrambling to get out.
FUD
Sometimes, like shy rabbits, investors get spooked. Maybe it’s a drop in price, maybe a temporary turnaround in the TVL. Suddenly there’s a panic. The shrinking contract becomes a self-fulfilling prohecy, and the women and children get trampled in the rush for the lifeboats.
Asset Price
The value of every protocal is based on the value of its chosen token. It might be an established one like BNB or Avax, or else they mint their own, like Titano or COSMIK. There can be all sorts of reasons why a token will drop in price, like the current crypto crisis, or simply investors losing faith.
BNB is a popular choice in DeFi but it has lost more than half it’s value in the last year. It reached it’s all-time high of $686 exactly a year ago today, but now it’s at $326. So, any DeFi returns linked to BNB are equally reduced.
Even stablecoins aren’t safe, as we’ve seen this week when UST slipped off it’s peg to the US dollar.
It’s no wonder that DeFi is often referred to as the Wild West. It is still possible for a savvy pioneer to make a decent strike, but there are many dangers out there, and that’s why I try to stick to the following:
My DeFi Rules
only invest ‘don’t matter dollars’.
DYOR, ask around, check Telegram and Discord, read the WP.
don’t invest at launch, wait till the dust settles, unless you’re a bot.
avoid falling TVLs and/or falling prices.
slowly invest more in the winners, cash out what you can from the losers.
get to ROI as soon as possible, enjoy the profits thereafter.
have fun.
Next Week
That’s it for this week. Next time I’ll deliver that deep dive into MDT that I promised.
Please let me know what you think of DeFiance. Drop me a comment and tell me if it’s useful or if there’s anything else you’d like to see.
Till then - thanks for reading.
Hello CK ! You are doing a great job with Defiance, the format is good and the content to the point. I have one wish : would you feel like dipping your toes in Rex, another certificate of deposit, which is about to relaunch "very soon" (sounds familiar?). Thanks for all your work
Love these dispatch commentates, they are sensible, informative and at the same time, fun to read. 🙌🙏