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2022 was painful after coming through 2021 feeling like i was invincible, here are some hard lessons i learnt going into the new year.
Scammed, rugged, became exit liquidity, but yet here I am still stubbornly looking for treasures in the heart of crypto winter. Not sure how many of you made off profitable from stablefund unscathed, but if you were stubbornly clinging on to hope of their v2 being the unlikely savior of 2023, you must have laid those plans to rest in Dec 2022 when the last nail in the coffin came through their email announcing the end of V2. Apparently crypto forensics are in and these guys are having to face a strong community of debt collectors, the same combined voices that supported them when things were still rosy. That is the power of Defi, in good and bad times.
What are my defi investment plans for 2023? I’m still in a bunch of ROI dapps. Going in defensive, i will leave house money running in PGV and Yield Robot once i ROI, put only max 10% of my portfolio in promising projects like Mischief of Fortune or BUSD Oracle which just launched. I have to learn not to throw caution to the wind like i did for many projects in 2022. The economy is shaky, its time to exercise prudence in the risky field of defi in crypto. Leave house money running, place yields in safe projects, multiply my cash slowly but surely.
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What’s next then? I’m going to focus on this gem that i found in Nov 2022 — FireFund. These guys are not your conventional seasoned crypto degen devs, they seem more seasoned investors than they are crypto devs, which is actually one of the first things that won me over. One month in, their contract value is growing at an increasing rate; there was no pump at launch, since they aren’t big on marketing at this point in time, just a slow steady growth that is in fact pointing towards an exponential growth curve. Quoting a message from one of their owners @silverracoon in TG:
The contract is designed to grow organically, especially the anti-whale dump tax prevents people from wanting to stake more than 5% contract value. We saw this coming but chose to bite the bullet and opt for long term sustainability
Hence this is by design, it’s to allow the smaller fishes to come in and underpin the contract and whales will slowly “grow in size”. We believe growth will truly be exponential this way, and it allows us to prevent a pump scenario where yields become unsustainable.
3 weeks ago a ‘whale’ was $300, now it’s $1k. Next month it’ll be $2k etc…
Such mechanics are one of the most innovative i have seen of all ROI dapp smart contracts. With the taxation figures, it means that the initial small investors who stake smaller amounts are in a safe position, unlike ponzis that incentivize whales in the hope of early pumps that leave the smaller fishes dry in the sand when they move on to the next protocol. I would not usually just take anyone’s word for it because anyone smart can just come in and say anything, but it is timely that we have actual transactions to verify their claims now. In the first month FireFund accumulated $19k in stakes. 4 days has passed, and the stake value is now $30k. The imagery of smaller fishes underpinning the whales is an actual concept playing out in reality. This is unlike any other protocol i’ve been in where i have to worry about staking in at the very first minute to catch the first bites so as not to be front run by whales. By design, this does not happen here.
The image above might be a figurative exaggeration, but that’s literally how i felt when Age of Emperors dev decided to stop the 1st version of his ‘game’ dead in the tracks and do Age of Emperors 2 with improved ponzinomics. Everyone, literally Everyone except the biggest whales who spent $45k and above did not ROI. It’s hypocritical how they went about saying that they are improving their ponzinomics with V2, but its the fact that they cop out of continuing with V1 when people were still staking while they were marketing, that really made me feel like 1 of the many fish in the sand above in the photograph. OK back to firefund
At the end of Dec 2022, the Firefund owners released their first month investment report to outline the results, and nature of their investments. How did they plan to continue investing to make their 0.5% payout sustainable in the long run, based on how they performed in the 1st month. I wrote about their project in an earlier article back then when they showed promise and had a well put together community vetted smart contract, but by now they have shown that they are putting their money where their mouths are, literally.
The above stats show their first month performance, which they mentioned was a proof of intent, and a demonstration of their investing capabilities. Due to the small value AUM, they wanted to show their efficiency at investing, which turned out to be 264% APR over 212 positions. This can be further verified through the smart contract link they shared. By now, this shown that the yield is backed by an external source of income, and the investors have skills.
This is the interesting chart. It shows that assuming a linear growth of 19k per month, and with devs withdrawing 10% a month for investment (instead of weekly which they are allowed to), and investors collecting 10% a month of rewards, 2 key thresholds are met in Jan 2024 and Oct 2024. The first one is when the total amount in treasury and contract value exceeds the value staked. The significance of this is that the 0.5% is finally sustainable. The second threshold is when the contract value exceeds the amount staked, which means that despite withdrawals and reward collections, the amount staked is matched by contract value, and a sizeable treasury which constantly makes money for the community, and presumably for the owners by then. How do we understand this? It means they are creating a cash cow which will produce an average of 25% a month through trading and defi insruments, while the cash pot grows. This cow gets fatter and fatter and after a while, the cash pot will = the amount invested after they start pumping the profits back into the cash pot and the cow will sustain the 0.5% daily payout.
How likely is this linear growth? At this time of writing, it seems like the growth will be exponential, because people are starting to see that the team has proven their mettle in a difficult economic climate. Resilience is what we need in 2023 and this team has it. Its still early days, 1 month is very short on most investment horizons, so we have to look forward to their next few reports to measure their consistency and resilience in difficult markets.
The above are in fact a large spread of asset class types that they use for their trades. Considering that most of their positions are closed, this pie chart shows what they traded in, rather than what they are still holding. Remember that buy and hold trading would not be able to yield such results.
These principles that they advocate above are really sound. Probably many of us already know this, but our greed or ill discipline prevents us from following through with it. It’s something that i would take as the 5 unwavering commandments of trading, but then again, i might not have the time to monitor my trades like the FireFund investors do since i have a day job, so i would rather pay some fees and taxes and leave it to the professionals while i hold my collateral in BUSD with them. Afterall, my funds are not locked in, and the mechanics of the contract do not allow the owners to withdraw faster than the investors. So lets say even if they have a bad month, as early investor, i would have ROI before they can say “this is a rug!”
This makes FireFund one of the safest protocols i know, that pays out a decent amount of yield per day. I’ve put money is pure ponzis that are popular and made money with it because i went in early and left fast. Here is a protocol that actually has a plan to feed the yields, hence there is a chance that this would last a long time, and coming in early, the chances of ROI and beyond are extremely high. It is still early as these guys seem to be just getting starteed. It’s worth noting that the broader economy is struggling, but to me its worth putting some beer money, not your life savings to try this out yourselves. DYODD.
- This is not a paid article, i am one of the investors and have been following through their work closely.
Website: https://firefund.finance/
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