I am writing daily on the Hive blockchain, but I am also busy doing research and looking into new trends in the world of cryptocurrencies. As you probably know, I have been following OlympusDAO and its forks closely, but today I would like to write about another trend I have noticed among aggressive investors who wants to get rich quickly. What is this trend? What kind of coins are they investing in?
Interest based on volume and your stack...
The first coin that I got to know that deals with this was OHMINU. It was running on the Ethereum chain and that is probably what caused its quick death. What was this about?
OHMINU
OHMINU was a MEME coin based on OlympusDAO and the point was that you would receive a daily interest of new OHMINU coins based on how many coins you already owned. But, that wasn't the only thing. Whenever someone transacted using this token a tax was deducted (15% of the total amount) and this tax was used to invest in other coins whereof the money would be handed out to the OHMINU owners again. In other words, you had two roads of interest with this, the daily OHMINU reflection interest, and the rewards you would receive based on the further investments of the OHMINU team.
AVAPAY and ZAZA
These are two coins on Avalanche and they are both still alive, but they are also kind of dead. They are operating somewhat different, even though the concept is the same. Here you buy tokens and based on how much you hold, you will be rewarded with funds gathered together from the taxes deducted after every single transaction. The more you hold, the bigger the reward.
With AVAPAY, you receive a reward in USDC, while you receive JOE tokens with ZAZA.
What is the problem with these concepts?
They all encourage you to buy and then hold... after all, if you hold, you will receive the interest/reward, but not pay taxes. But, what will happen if everyone just buys and holds, and that's it? There will only be rewards for as long as there are new investors coming. The moment this number starts to decline, the rewards will drop at once, and people will start to sell seeing that there are no more rewards coming their way.
And yes, that is what I have seen both with AVAPAY and with ZAZA.
The idea with these projects are all good, but they are lacking something that would make them sustainable over time. As of know, they all seem to run for a couple of days, enjoying the ride as an influencer tweet about it, but when the wave has calmed down, there are no more rewards to gather (since the volume has disappeared), and it is falling kind of dead to the ground.