Disclaimer: Your funds are your responsibility. All information in this article is reflecting my own investing strategy and should not be taken as financial advice.
Centralized exchanges have identified a new revenue stream and as a business model, it seems to be working out just fine. Ever since Binance introduced their own "blockchain" other CEX giants have been trying to keep up and Huobi is probably one of the more serious competitors right now.
We all thought centralized excel spreadsheets can't replace actual blockchains, but Binance still managed to convince people otherwise and now we are left with this awkward reality. Rather than complaining about it, why not try and turn a profit from this centralized crypto frenzy?
Enter Butterswap
How?
HECO is the same thing as BSC so you will need to set it up as a separate network first. As always, click on the dropdown menu on Metamask, select "custom RPC" and enter the following parameters:
Network Name: HECO
RPC URL: https://http-mainnet.hecochain.com
ChainID: 128
Symbol: HT
Block Explorer: https://scan.hecochain.com
You will need some Huobi tokens to pay for the fees on the network and the best way to do that is to create a free Huobi account and grab some HT there. It requires no KYC for now so everything should be very smooth and straightforward.
Moving funds to HECO is a bit harder and all of the bridges suck. My best recommendation would be to deposit funds on Huobi and move them from your Huobi wallet to the HECO chain. These transactions usually cost a few cents so it is a lot cheaper than using an ETH bridge.
Why?
Every chain has a flagship dex. ETH has Uniswap, BSC has Pancake, Polygon has Quickswap... You get the idea. With HECO the situation is a bit complex. The leading exchange on the Huobi chain is Mdex and it is also a top 100 project according to Coin Gecko so competitors will need to work hard to beat this one. However, Mdex has a very specific design and isn't as user-friendly as Pancakeswap, for example. It also tends to have downtime issues which is a very bad sign for a decentralized exchange. That is why I'm placing a small bet on Butter.
The development team for ButterSwap comes from BitUp, a tokenized index fund that launched in late 2018 and had moderate success in the Asian markets. So far, ButterSwap was a success with no exploits or security issues. There was an event where the number of tokens issued per block skyrocketed due to an internal staff error but the situation was handled smoothly and almost no funds were lost in the process.
Roadmap development seems to be on track and TVL has reached 10M. Plenty of new features are expected to come in the next few months so now seems like a good opportunity to jump on this ship. Constant updates and communication from the developers in the Telegram channel add another layer of confidence for me personally.
Investing Strategy
ButterSwap does seem like a promising investment opportunity but you should never invest more than 5-10% of your farming funds at this stage. There is still room for a slip-up and no one deserves to be a bag holder so it is better to be safe than sorry.
Put 100% of allocated funds in the Butter-USDT farm. Harvest and compound in the Auto Butter Pool.
Reasoning:
The Butter-USDT farm currently has an APR of around 600%. Your farm rewards should add up to 1.6% daily and 60% monthly with a max compound APY of about 45k% but yearly numbers shouldn't be taken into consideration. If we go for about 2 months with no sudden drops in price, you should get your investment back and net good profits in the process.
On the other hand, as already mentioned, ButterSwap doesn't have much competition on the HECO chain. MakiSwap is one of them but it is lead by a very incompetent team that is also behind Unilayer. Both projects are very poorly managed so there is very little chance Maki will see success before Butter.
When Lottery gets introduced it should speed up the token burn and outpace the issuance of new tokens. Right now the circulating supply of Butter tokens is at 500M which gives it a ~6M market cap. If HECO gains popularity and Butter receives a fraction of Pancakeswap's growth, your small investment could turn into a small fortune and we all know Jerry loves these bets.
Risks involved
The ButterSwap team already made one big mistake so it won't be a surprise if they make a new one again. Investing with caution and discipline is highly advised.
There is no information regarding the team size and their expertise. Since we do not know who is making the product, we shouldn't put too much money into that product. Two security audits have been performed by Knownsec and CertiK but that doesn't guarantee safety as seen from many other examples.
Token issuance per block is still very high. 240 new Butter tokens are mined with each new block and the burn rate is very low. There is no clear info if the max number of tokens is capped so until a governance vote is passed, it may be set to infinite as far as we know.
Jerry Rating - 6.5/10
This is obviously a high-risk/high-reward play. The Huobi chain is certainly not a household name and no one knows if it will ever get user numbers similar to Binance. And since ButterSwap success is closely tied to the success of HECO, place your bets accordingly.
On the upside, we have a chance to invest in a possible PancakeSwap 2.0. It will have all the same features with minimal competition so I find it hard to ignore this one. The fact that Huobi transactions are dirt cheap right now is also a plus since you can make thousands of transactions with just a few dollars worth of HT.
Can this Butter taste like a Pancake? Jerry thinks it can.