A small experiment to prove that if something looks too good to be true, then it is too good to be true.
Despite rockets falling on Kyiv in retaliation for the partial destruction of the bridge to Crimea from the Russian mainland, markets are looking remarkably flat this morning.
Curious Cryptos’ Commentary — Web-based miners and stakers
There are many websites out there which claim that if you deposit some cryptos, those cryptos will be added to a mining pool or a staking pool, from which you will earn rewards.
Many of these are legitimate — I am a user of stake fish (https://stake.fish/) for any PoS (Proof-of-Stake) coins I own. There are many other reputable firms involved in that business.
I have also previously staked some alts in very high-risk, but hopefully legitimate, DeFi (Decentralised Finance) protocols.
And longer-term readers remember well the CCC’s experience (shared publicly for all our benefit) of RTPs (Reserve Treasury Protocols), most of which were scams, but some (Wonderland in particular) continue to try to build an operation of value.
I get asked many questions about variations on these themes, all of which invariably advertise ridiculous potential gains.
The trend began with CEX (centralised exchanges) offering up to 40% or more APR for depositing stablecoins, purely as a marketing cost. No thanks — the risks of staking stablecoins means that I would not even consider doing so unless the APR is way higher than 100% (see CCC 1st and 2nd November 2021 amongst others, back copies available free on request or on our website https://www.curiouscryptos.com/).
RTPs took this to the extreme with billions of percent APY on offer for unbelievably inflationary native coins.
As a natural sceptic, I believe that you can assume that if something looks like a free lunch, then you are the free lunch. That is always true, except in the very specific case that our CTO, Nick, is extending an invite.
But one of these staking protocols has been brought to my attention, so I thought I would take a closer look.
By the way, this is not a recommendation to get involved — this is a trial test for our mutual benefit.
This operation is — in my opinion — guaranteed to be either a total scam, or a Ponzi scheme that will inevitably fail.
But as a real-life experiment to prove that websites like this are fake, the CCC treasury will invest a grand total of $10 worth of BUSD to prove that anyone offering 1% daily returns is simply lying in your face.
Drum roll please.
I bring you scammer of the day, and the lucky recipient of $10 of my hard-earned cash:
At this point, I am going to assume that you are familiar with BUSD (a stablecoin) and know how to interact with DeFi. If not, there will still be salient lessons to learn, so please hang on in there.
Firstly, and most importantly, I have set up a new profile using Brave Browser. This allows me to set up an entirely new MetaMask wallet with new private keys which is then totally quarantined from my usual MetaMask wallet.
This sounds fiddly, and I agree with you, but as you will see, this experiment is destined for a 30-day life and no more. After that point, this new Brave Browser profile, and the new MetaMask wallet will be jettisoned for ever more.
(As an aside, this little technique is an efficient way of retrieving the two hard forks following The Merge — ETHW and ETF).
The brand-new public key is this one, if you wish to follow the details of my experience with BUSD Wealth Builder on the blockchain:
Next I set up Smart Chain in my brand-new MetaMask wallet (see Module 1.11 MetaMask of our free online training course if you are unsure how to do this https://www.curiouscryptos.com/course-modules) and deposited 10 BUSD.
But of course, first one must import BUSD as a token with contract address 0xe9e7cea3dedca5984780bafc599bd69add087d56:
Now we get to the fun part, if blowing £10 is your thing.
The website tells me that if I stake 10 BUSD for 30 days, I will earn 8.33 BUSD:
That is a near doubling of a stablecoin in a month. Can’t argue with that eh?
Another small wrinkle here, I need to have BNB (the coin native to Binance Smart Chain) to pay the gas fees to approve that the smart contract can interact with my wallet, and to deposit 10 BUSD into the smart contract. Fees for approving the contract came to 0.00022 BNB and staking cost 0.0012 BNB, a total of 36p.
Here is a nice touch. Readers will recall from the CCC dated 7th October 2022 that most smart contracts are set up to have access to unlimited funds in your wallet, but that within the permissions settings, a custom spend limit can be set. In this case, the custom limit is automatically set to your stake amount, luring the unwary into a false sense of security:
And in MetaMask:
After a 5% transaction fee, I have $9.50 of staked value. Let’s see where we are in 30 days’ time.
Trigger alert warning — if any reader feels that they are “literally shaking” (as claimed by a Durham student who cannot emotionally cope with a different point of view) after reading my commentary, then I can only suggest you don’t read, or don’t shake. It’s up to you.
Cryptos — none of my commentary should be seen as a recommendation to get involved in cryptos. I might be talking complete nonsense without knowing it. Any crypto investments must be viewed as extremely high risk and treated as if they are worth zero until sold.
Stocks — just to make it clear this is not a stock advisory service. The CCC team does not provide financial advice in any way at all. Any reference to asset prices in this commentary are there to simply give context to the commentary and to give colour to the performance of certain stocks related to cryptos.
For the avoidance of doubt, this newsletter is not an incitement to buy cryptos, buy stocks, or even to sell family members in the hope of buying cryptos or stocks.
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