Three initial main points:
- Crypto excites me and is completely natural to me by now.
- I confidently know how to make money in crypto across various mediums.
- I don't like USD and don't want it in my bank account unless it's going to be spent immediately.
Framework:
During the last bear market, I figured that earning 7-8% interest on stable coins would be my strategy once I sold towards the end of the next bull market. No rocket science here. Given my limiting geography, I wasn't aware of a better option and was content with that end game.
Hopefully I didn't hold through another recent top to miss that chance as prices continue to slide down...
At the time, a steady 7-8% seemed like the best option since I don't want fiat and was timid about using crypto as collateral to borrow against. Stable coins earning simple yield would do the job with minimal risk, while also allowing me reaccumulate holdings during the bear cycle.
Fast forward to now after getting deep in decentralized finance (thanks to several airdrops with huge incentives that gave me no choice but to engage), opening my eyes to its ongoing potential. Once you see the light and how efficient it is to grow your holdings, it's hard to unsee it.
Now I won't go into extensive detail about past airdrops, but many start off with staking and liquidity pool APRs well above 500% that decay slowly as these incentives attract more money. One of my last ones was cruising at over 800% when I started and is still earning 525% now. In a short time, I've grown the total token amount by 25% and extracted almost the entire airdrop sum out into UST. This was a small sum to start, but it didn't have to be. I just chose to play with my free money, but it'd have been easy to move real funds in and enjoy the same rates.
In short, you don't need a lot to make a lot when you compound high yield interest. If you pick your spots and recognize that many of these airdropped coins and/or yield opportunities have active Twitter accounts, strong Discord channels, and even steady Medium posts, you can get a sense of which the right ones are to engage (versus take the money and run). Sure, there is always smart contract risk, but again, researching and choosing wisely is part of the equation.
I should clarify that much of my experience has been on the Cosmos ecosystem in 2021, where airdrops have been generous and often based on staked ATOM, OSMO, and JUNO. I've also dabbled elsewhere, but this network is highly interconnected, cheap to use, and personally trusted. If you're unfamiliar with the first two tokens there, I highly suggest catching up to speed as these should not be ignored. IBC and Tendermint Protocols are not to be brushed under the rug. Interoperability is vital, and I've seen it blossom first-hand. There is much more runway to go as these ecosystems develop and integrate rather seamlessly by sharing protocols.
As I've said a few times, HIVE devs who think this isolated chain is the the best-in-breed and end-all-be-all savior for Web 3 need to think bigger and realize that we're light years behind on interoperability. That's likely where things are going.
One main reason why I didn't use AAVE, YEARN, CURVE, etc.. was that I really didn't need to. I saw little value in trading my offline holdings or even online holdings for the tokens to use there, realize taxes, and gas fees, just to make 5-13%... Even if I made 30%, I have far more than that at my fingertips in an ecosystem I'm extremely comfortable in, and where a solid stable coin (UST) is also available to earn 19-20%! It's a no-brainer for me here.
Back to the main topic:
With many streams, I've been meticulously tracking every crypto operation since the start of the New Year. This has helped me realize what's coming in daily because I can easily tally it. I'd previously kept records in a diary format, but didn't tally things up much. I simply treated each operation as being related to itself, and usually decided to compound the interest for the long run. Some here. Some there. It was nice, but I was in a reinvestment mindset. Price didn't matter. This decision was the right move then since many additional airdrops scanned these accrued gains to further snowball things. It was also before the prices started rising, and they've done very well.
Using my new tracker, and despite crypto prices generally being down, the Cosmos ecosystem has really stood out of the pack. I believe that more people are realizing the value of staking their airdrop-eligible tokens, are happy that its latest upgrade is complete, and see the enormous value of cross-chain interoperability. Nobody knows, but I do know that their ecosystem is growing and onboarding new chains as an increasing rate. This means more utility, opportunities, and value. ATOM has positioned itself to be at the Hub of that, quite literally. While token economics can be improved over time, it's on the right track.
The Dilemma:
Now my scenario is my own, and you have yours, but I'm likely not alone that it's becoming more of a reality that we may be able to live off our crypto. The alternative is comparing it to holding it as assets to buy and sell for profit. Buying and selling seems very crypto 1.0 to me and I'm tired of being dependent on manipulated market prices. What I can control are the interest rates I choose when I provide liquidity and network security via staking on chains I want to be a part of. I can predict and control the volume of tokens I earn, and that's a non-zero sum versus my offline holdings that are sitting still.
Are any of you here starting to come to this realization too?
The crux is that liquidity pools or simply staking in the right places can generate passive income that feels like it might be enough to consider flipping the switch and graduate to a passive income model. While I'm getting close, I think I need one notch more to feel good about it. But, for starters, it's cool to think that I can pay my rent with it if I wanted to. However, learning to part with my crypto versus holding and compounding it is another challenge.
More Trade-offs:
As I sell curbside items I personally salvage year around (going outside immediately after posting this in freezing conditions and snow), because I quit my job 7 years ago to do this for freedom/environmental reasons, it's tempting to put that hustle behind me and rest. The ironic part is that I'm considering this based on the yield from a small portion of my holdings, awarded via airdrop (excluding the UNI drop I swapped for another token). If I went full-passive, would I be selling out on the environment? Perhaps I'd be freeing myself from the financial aspect of it to enjoy it more, or even scale up without my boots on the ground (literally).
Also, while managing Defi doesn't take too much time during the day, researching crypto and opportunities does. I find myself lagging on the recycling/cash income side of things because there's not enough time in the day, and it feels very inefficient. A few wise financial decisions can generate a month's worth of hustle, and at some point, shouldn't I want that for myself?
Knowing what I've learned about the Defi space also has me questioning if I should still be holding most as blue chips long offline, not earning ANYTHING, and definitely not compounding. Sure ETH 2.0 will be here in another year (cough), and there's Lido for WETH, but is native staking at 4-6% really going to be stronger than 100%-500%+ today? I'm not trying to be greedy. I'm actually trying to determine if I'm making a mistake in not doing this. If I made the move last July/August like I mapped out, I'd be on Mars right now, but I froze because of my fear of realizing taxes before a potential move to a state/local tax-free place. Indecision and fear were the thieves of that opportunity. I still have the screenshot of the Excel projections and I just have to hit myself in the head for not letting the green (APR) win out instead of the red (taxes).
To be honest, APRs below 50%, aren't very exciting when I'm consistently getting a range of 90-500%+ on stable projects with real communities, Twitter accounts, and budding Discord channels. Defi is a special place while the rest of the world (and many even in crypto haven't thoroughly explored it yet). Also, most "risks" are more than justified by the returns, and I don't mean that in an overconfident way. If anything, the risk on some ecosystems (not all) is fairly low, while the returns reflect much higher risk. I feel that this is just the early-mover/adopter advantage playing out while most are uninvolved, or on larger and more popular platforms.
I'll keep riding these trains while the getting is good, and see little reason to fully unwind even if APRs drop to normal levels. I really like many of the projects and have watched them grow closely to trust that they're worth holding. This is the mindset that may keep many of these tokens stable in price or even rising, as much is locked and people would need a really good reason to exit at those yield levels. Sure, many tokens may be inflationary, but the issuance will recede over time. It's all still new and the tokens are being distributed.
As I wind this down, it's important to know that much of this is also facilitated by highly interoperable Defi platforms that work seamlessly together with barely any transaction costs. It's virtually free to use and has been reliable on a daily basis. While others are deterred by ETH gas fees and flock to L2, COSMOS and others offer virtually no such friction or expense. Other Defi platforms off of the ETH network are also in the same boat, but with their legit tokens not offering as high yields as the COSMOS chain. I still diversify there because it allows me to use my L1 tokens effectively and earn more than if I kept them in native wallets. I also learn and get exposure to new projects by being in the weeds, so to speak.
Lastly, as I try to see if it's better to reduce my man hours outside and for reselling for potentially a better way to generate income, my stable coin plan has also changed. As mentioned before, UST on the TERRA network yields 19-20%, and that will be my destination when the markets heat up again. I've started accumulating some for dips, but often spend it on in-game play-to-earn NFTs (even on Splinterlands too), which is another partially passive income stream I'm building from the ground floor. Splinterlands doesn't quite offer the yield at my Silver III level to earn funds there, but hopefully my land and cards can be leveraged in the future for some. There's definitely a lot of in-game earning potential on other chains and gaming suites that are attractive that I'm bridging into for the next phase of discovery. Until then, I'll keep playing with my Defi yield, spending it on future investments instead of risking new capital (playing with house money instead), and building up UST to use if the market continues to drop.
Outro:
As you can see, I've been fairly transparent to see if any of you can relate, have advice, or wanted to share input on how you've potentially approached the choice of going full-time crypto income (or not).
Hopefully you've explored a bit outside of HIVE. Please don't limit yourself and/or feel pressured to stay 100% HIVE or bust. You're not a traitor for doing so. If anyone sees you that way, they don't care about your well-being and are probably insecure. It's wise to diversify and educate yourself for the new financial system, not just Web 3.0.
P.S. All of this could be fiction and I only own HIVE. I can blog to earn all the passive income I need!
