Via DeFi platform cream.finance you can for example use DPI as collateral, that I happen to hold. You can borrow different fiat coins such as USDT, USDC & DAI at an interest of around 15%, however you also get interest on your deposited/locked collateral, around 3%, but since I deposited 4x the collateral as the size of the loan, I end up paying net only 4% on the loan, a great deal, especially compared to traditional finance where the best loans available, that you can also freely invest in any other market and can even spend if u wish, would be from Interactive brokers, using your stocks as collateral, but still paying 5% interest.
Taking loans against your assets and thereby invest with leverage can be risky if prices just went up a lot a a strong correction is more likely then and can cause margin calls, but I don't believe that is the case currently in crypto.
In my case for example, cream.finance has collateral requirements of 45% for a coin like DPI. That means that if value of loan is more than 45% of value of collateral, and for example loan becomes 50%, they will start liquidating my collateral to pay down the loan as to make sure the loan is payed back (Interesting to note is that this liquidation process is also done decentralized, anyone can start liquidating my collateral and pay down the loan, and even make money doing so, 8% of the loan in fact, money I will lose if this happens).
45% is also therefore the maximum you can loan against your collateral if it is DPI, but for example if it is ETH it's 75%. However if you would max out the loan you would get immediately a margin call if price of your collateral just goes down a little. So you want to go for say half of that, 22.5% if DPI, so that price of your collateral needs to drop by -50% before you get a margin call.
What are the chances Crypto and DPI in particular drops another 50%, after it just dropped 50% past month? I would estimate at only 10%. That means good odds to take. Especially if you are able to invest the loan in another great uncorrelated opportunity, for example, I'm looking to invest the proceeds into hotels/resorts that have been severally affected by plandemic, an opportunity that might be gone in 6 months if rulers stop closing borders and tourism starts recovering.
Also, if I am unlucky and the 10% chance of crypto dropping another -50% happens, causing a margin call, I can still reverse the investment in resorts, if it is liquid enough, or sell another investment, such as my short gold, airlines or tankers, to prop up my collateral requirements and avoid liquidation.
Fully collateralized my 9% DPI, hope I can find solution to use my BCH also. Via cream.finance seems risky as you would have to use binance smartchain and would have to therefore wrap BCH on binance causing counterparty risk. CeFi solutions such as Nexo.io seems expensive at 15% interest for loan, and no interest on BCH collateral, and Celcius I don't trust to be good business given poor track record of it's founder Alex. Anyone knows better solution?
Other than that, not doing much in my portfolio. My short options on GLD are recovering as gold is starting to go down again. Not too late to hop on, think risk/reward is still very good, Puts for example at 160 strike expiry months of this year can pay off big time as think likely GLD will go to 150 or lower.
Also continuing to invest and donate BCH into BCH ecosystem. When prices drop so much I like to do that, not with my own stash but by buying the BCH with other non crypto sources, such as the cash or margin from my stock broker. It's cheating my system a bit as I am not allowed to increase exposure to BCH when following the Kelly criterion but it's only a few percent so all good.
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