Ethereum fees too high? BSC yields too low?
DeFi is on SmartBCH and I've tested it already.
It was just five days ago I gave details of my first SmartBCH DeFi investment as a liquidity provider in the MuesliSwap platform:
I plan to invest in all three SmartBCH DEXs and I've already explained my reasoning, which is to diversify risk and be ready to lay hold off any opportunity that appears.
As I explained I am not a DeFi expert. I'm still learning and diving more into the DeFi philosophy by researching and testing.
Although, I still think there is a lot more than meets the eye and SmartBCH DeFi is at a current state that can grow into unpredictable levels.
Screenshot from: MuesliSwap
Let's find out how this MuesliSwap investment is performing:
5 Days Later
Image Source: Unsplash
I watched the price of MILK that day dumping, and I felt it wasn't reasonable since this was just a day after presales ended. The market cap was just $300,000 for the tokens in circulation and it was looking like an opportunity.
If I had more experience with the DeFi scene I would invest 10 times more than the 0.5BCH I did for testing purposes.
Checking the other three DEXs, market cap, and the yields I felt I had to make a move and at least give some support to the third DEX that decided to join the SmartBCH network. I have elaborated more on that in my previous article (link).
I used 0.5BCH ($300 at the time) into the MILK/BCH liquidity pool. Bought 500 MILK, and used these tokens to provide liquidity together with about 0.23 BCH. Had some change too and I bought some other tokens with it.
3 hours later:
It seemed like a good start and with about 300% APR at the moment I made 60 cents in just three hours. I was happy to see this and it was calculated as such.
Day 1:
The price of BCH had dropped a little and MILK was stable at $0.30 so my total liquidity was $20 lower. Although it had already started paying in MILK. I was up by 8.721 MILK (2.26USD).
Day 3:
The second day was just about the same (I didn’t take a screenshot). However, it was the third day of this investment that came as a big surprise. APR was increased to over 1,000%!
The price of MILK started rising and now it was $0.41. Also, BCH price was rising and had these two gains:
$22,72 from MILK earned and $55 from the appreciation of the prices of MILK and BCH.
Day 4:
24 hours ago I posted this screenshot on noise.cash (link). APR had been volatile and kept changing but at a very high rate (800%-1200%).
The initial investment of half a BCH had almost doubled!
The price of MILK at that point was $0,74, contributing a lot to the profit increase.
The best part was the appreciation of the price of MILK, but what I was interested in is the MILK rewards, which now seem to have reached $67.63 which was above any expectation I had!
Day 5 (Today):
(Current MILK price: $0.917)
24 hours later, it was rewarded with 12MILK more and now the MILK earned rewards reach $94.64! APR has dropped a bit and as we can also see from the different screenshots, liquidity in the pair is increasing rapidly, currently reaching $743K. With 500 MILK staked, the ROI was over 20% for these 5 days.
The total investment of $300 has doubled, mainly because of the price increase of MILK, but also at a high rate of yield. I had a conservative approach and was expecting way less MILK earned, and of course, I’m overjoyed to see this working so soon.
Now the investment has more than doubled. $533,20 staked + $94.64 rewards = $627,84. Profit (rough estimate): $330.
Disclaimer:
*Price of MILK dropped to $0.827 while writing this, so the total profit also dropped but the total profit remained at 100%.
There is always substancial risk involved with DeFi and it is better to have everything calculated since when prices drop profit will also drop. Always determine the risk of your investment having in mind the worst case scenario.
Why SmartBCH?
Imagine now trying to make the same investment in a DeFi running on Ethereum a few days ago:
In the case of Ethereum we have to:
i) Swap half our ETH to buy the second part of the trading pair. (I bought with 0.25BCH MILK first and provided liquidity with 500 MILK and 0.24BCH).
The cost will be $134,90
ii) Add LP at Uniswap, 1inch, or any other DEX. Another blockchain transaction that needs fees.
The cost will be: $118.04
iii) When we decide to cash out, we first have to remove LP and this will also cost between $40-$120 depending on the fees.
Let's say the lowest cost will be $40 expecting fees to be extremely low.
iv) Sell the tokens back to ETH.
Another $40.
Total (roughly calculated): $332.94 in Ethereum blockchain fees.
Maybe fees could be less if we are planning to wait for the cost to go lower. But it will certainly reach hundreds of dollars anytime we choose to invest in Ethereum DeFi.
To make any Ethereum investment work, we require investing a lot higher, otherwise the fees make it unprofitable and increase the risk substantially. The risk is also increasing and any loss could be detrimental to our portfolio.
The cost of fees when investing in SmartBCH DeFi is just a couple of cents. Maybe it could reach $1 if we make many swaps and trades and diversify into various pools.
Less than $1 in SmartBCH fees, compared to $300 in Ethereum fees for a similar investment.
This is the major difference that gives a competitive advantage to SmartBCH over Ethereum. Fees in Ethereum are 3,000% higher than SmartBCH fees. Basically, with SmartBCH the fees are insignificant and don’t even count in our calculations.
In Conclusion
Image Source: MuesliSwap
It hasn’t even been a week before my first ever DeFi investment and I’ve doubled up already, although this is mostly a consequence of the price of MILK!
Not the actual milk, which is also experiencing rapid inflation as all consumer goods! This is the native token of MuesliSwap.
Well, who would have thought!
MILK is now 300% higher than the moment I invested. I would not buy a DeFi token to hold, though. I planned to use it for liquidity and staking the LP. (LP is the initials for liquidity provider and LP token is the token we receive as a reward).
Finally, one last thought I had on noise.cash:
SmartBCH is still in its infancy. It is better to get in early and while there is always a risk, getting out early is frequently a mistake.
I will try more investments soon and let them mature. Yield farming, staking, and DeFi, in general, are already attracting billions in USD.
Investors from other platforms will flock to something new that works.
Make it work in the beginning and it will stay for a long time.
Images:
Lead Image from: Unsplash, by Mirza Mustofa
Other Images from MuesliSwap
Related Material (previously published on read.cash):
SmartBCH Metamask Tutorial - Connect to Network, Transfer BCH, Add Tokens and Trade on DEXs
How to Set Up Metamask and Add Networks: Binance (BSC), Polygon (Matic), OKEx, SmartBCH - Tutorial
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Haha my head is swimming in this SmartBCH thing now. I can finally understand most of what you wrote. Question really is how much we can earn with SmartBCH eh? 😁