Really? Lending Platforms?
Before we jump into the details, we wanted to address the broader question of why we spent, or continue to spend, any time and money on lending platforms, especially after Bitconnect, Davor & Hextra - to name a few of the clusterfucks.
It boils down to a risk vs reward analysis and the power of cumulative interest. Considering Bitconnect, it was a 90-100 day gamble. If something returns an average of 1% per day, it only has to last for 100 days to earn its investment back. Any time past that and you're earning profits; if it lasts for 200 days, you double your investment, 300 days - triple your investment, and so on. If by chance, a platform lasts for some time, and you've reinvested your earnings as frequently as possible - then you start to encounter the effects of cumulative interest - the power of which Einstein called the 8th wonder of the world.
Since the likelihood that these platforms will not last is so high, it's imperative that one has the discipline to withdraw earnings as fast as possible, if minimized risk is the desire.
How We Fared
In the case of Bitconnect, we were invested for ~95 days and earned about 15% on top of our original investment, not counting any value from BCCX tokens. Averaged out for the year, that would be a 50%+ gain, which is not bad when compared to anything outside the crypto space and pretty decent when compared within.
As for Davor & Hextra - we called Davor right and made a large withdraw when the price was still $130, getting a 3x return on investment. Hextra - assuming it doesn't come back - we made the wrong call on and lost the full investment. Together, Davor & Hextra are mostly a wash. But if Hextra manages to come back from the grave, it'll be a decent windfall. That's a big if.
Lending platforms are by far our riskiest investment, but they also offer some of the best returns. We look at it like gambling, and consider the money gone the moment it hits a lending platform. It's only money again when it comes out - in the meantime, we have some dice to roll.
Lending Platform Updates - Some Details
Falconcoin has been making slow and steady progress. Last week they started and concluded their staking promotion quite smoothly, locking up a little over 3.5 million coins. They're now working towards getting listed on CoinMarketCap.com and the first external exchange. The community has continued to solidify and their Telegram channel is quite active with over 4,200 members. The supply of information from the admins and often directly from the CEO of the company is steady, and accurate. One of those announcements was about a feature called Falcon Shield. From our understanding, this will give detailed insight into the financials of Falconcoin. If implemented as described, this would be a huge step towards the transparency that many believe lending platforms are lacking. If there is truly a way to generate these kinds of returns legitimately, we're excited to see them. We're skeptical but they've got our attention.
Thorncoin almost lost us when they opted to rebrand themselves as a short AND long term staking platform, rather than a lending platform. But alas, our money was already there on the platform, so what other option did we have but to stick around and see what became of it? So stick around we did, and to our surprise, it wasn't as bad as originally thought. For now, it does appear to be just a rebranding - the mechanics of the platform mostly remain the same. The short version of Thorncoin mechanics is this: long term staking is just like lending with a daily % payout (in Thorncoin) where you lock your coins up for extended periods of time (60-180 days) and short term staking (currently) earns 12% a month and coins are locked for 7 days. Starting today, they are attempting to roll out their internal exchange but as of last announcement the exchange is paused due to some issues encountered.
LendConnect - We're actually not on this platform, but we saw the price spike two days ago. Took a brief look at upcoming updates and the spike looks to be caused by the announcement of an internal exchange coming.
Davorcoin - After ending their lending and staking programs abruptly, the price tanked and the exchange, though still functioning, has been seeing less and less volume. Our thoughts: The show has ended here and best bet is to stay far away.
Hextracoin - After apparently getting hacked, Hextracoin implemented locked pricing for coins that will increase every week or so. This created a sell panic, and now there are a massive number of coins up for sale at the lowest available price. We've had a sell order up for the last month, at the lowest price - resetting it a few times - and have yet to sell the coins. Our thoughts: Stay even further away.
Still Investing?
While we have done quite a bit of reinvesting of earnings, we haven't put any additional funds into lending platforms since the lending meltdown and it'll probably be a while before we do again. We feel sufficiently entertained/exposed on the current platforms and would like to see 6+ months of stability before we imagine our confidence would start to return. In the meantime, we'll continue to provide updates on Falconcoin and Thorncoin.
What do you think of lending platforms? Are they all a scam or do they have their place in the world? Let us know your thoughts in the comments.
This is Part II of a series, you can find Part I here.