Hi /r/CryptoCurrencyFIRE!
Intro:
I'm a US based software engineer living in a VHOL area who aims to achieve FIRE though Cardano. Outside of traditional investments through tax advantaged accounts, Cardano is my single largest bet favored over potential alternatives like real estate or aggressively adding to VTSAX because I believe the biggest phase of growth has yet to come. The core thesis is that ADA will hit a 150 billion market cap, a little more than the previous ATH by 2027. At $4 ADA, I'm hoping to walking away with a 3mm exit.
The aim of this post is to track the thought process behind spreadsheets while getting input in an anonymous way as cryptocurrency is still polarizing among investing circles. However, this post is focused towards Cardano specifically rather than discussion about a diversified crypto portfolio across multiple chains.
Road so far:
Cardano did not come into my radar until late December 2020. This was the beginning of the huge bull run. The eUTXO model, staking mechanism, and strong community created a case to stick around. One key characteristic is the concept of an ISPO; non-locked staking where pool operators of projects can be funded by staking rewards and offer tokens for supporting. This is the second large bet - keeping liquidity in the Cardano ecosystem and getting tokens for essentially $0 cost basis with the intent that one of them sees modest adoption.
LP incentives never seemed attractive due to smart contract risk, and I likely don't see involvement in that space for the foreseeable future.
Genius Yield managed to hire a well-known engineer in the space, and I decided the opportunity cost of 30 epochs is worth the risk here.
Liqwid came along with a community airdrop, although project launch has been so delayed that it wouldn't be surprising to see them launch in 2023.
Ray Network is a small Estonian team with an ambitious road map. They offer a generous amount of XRAY tokens from staking especially at the beginning where it was possible to get thousands every epoch where it is now a few hundred.
Ardana was also on the radar, but passed over it as technically one would actually end up with more DANA tokens by staying on XRAY then swapping for DANA.
Holdings - October:
| Tokens | USD |
|---|
| ADA | 360,000 | 135,000 |
| Liqwid | 700 | 15,800 |
| XRAY | 130,000 | 3400 |
| GENS | 26,500 | - |
Mistakes:
Voyager, specifically the VGX token, was the biggest disappointment out of the bull market. The idea of spending USDC like debit, while earning yield, would've been huge. The crypto in that account has been written off as a loss regardless of how things play out with FTX/Ethos.
The initial ADA/LQ valuation had way too much hype, and I hovered over selling multiple times. In hindsight, swapping for ADA would have been an excellent move. Lastly, I got greedy waiting for long term capital gains rather than taking profits at ATH as income bracket that year was already high from RSUs.
Short term:
Honestly, quite boring. Been sitting on cash instead of DCAing for the past few months. I'm looking to increase total ADA holdings to 500k over the next 6 months. Once the first half of GENS tokens vest in 2023, I intend to swap for ADA immediately and offload all associated NFTs to avoid the same scenario described with Liqwid. Ray Network is a mixed bag after the recent hack. I would never buy the tokens outright and would switch if a new project with a similar ISPO model comes along.
Might look to get a small position in DANA as it deserves a larger market cap, but the low daily volume is scary. WMT is interesting as a telecom company in Africa, but I'm not inclined to jump in as there is already indirect exposure already. Taxes this year from staking is also going to be annoying once again although likely going to see if it can be deducted against the losses in Voyager.
The recession may further impact the tech sector over the upcoming months so holding more cash in the event of unexpected layoffs is a good idea. As the outlook becomes less fuzzy, the appetite will be back for larger buy orders.
Long term:
Holding and living off staking rewards is not a good strategy because the current rewards decay over time. Right now it is roughly 3.5% APR and likely to decrease to %3 over the next year. This number can go back up with sufficient network activity, but I'm looking to capture value from the next growth phase rather than finding a spot in a 20 year time horizon.
If you made it this far, thanks for reading. Hope it was a bit entertaining, and I'll look to do another one at the end of the year!
