Because the world of the blockchain is so staggeringly dynamic (and aren’t we fortunate to be able to experience this all first-hand) it means there are an extraordinarily large number of opportunities available to us at any given moment of the day or night. Any serious attempt at trying to keep up with the sheer volume and diversity of opportunities would surely require a team of people to be employed on a full-time basis, not only spotting what’s new but also keeping up with developments on what is already up and running.
Managing the Opportunity
As a sole operator, I have tried to deal with this challenge in two primary ways, by focusing the bulk of my attention on:
blockchains and ecosystems that look to me like long-term winners
those projects that build out and improve the underlying infrastructure of the blockchain and Web3.0
This approach still provides a generous flow of new opportunities, whilst helping me to bring focus and keep things manageable. It also helps keep me sane and not get overwhelmed.
Speculation and Fun
Whilst maintaining discipline in the way you approach your blockchain related investments is very definitely a good thing, you do also need to leave yourself some room to have fun and to engage in some more speculative investments. All work and no play would make Renaissance Man a very dull beast indeed.
With this in mind, I have, for some time, been looking at options for building a portfolio of largely speculative holdings in mainly smaller projects, whilst adding little or no risk to my overall portfolio. That may sound wishful thinking, but remember this is a time and place of extraordinary opportunity and it turns out there are ways to do this. Here I am going to share the techniques I have started using to achieve just this.
Launch Pools
One handy way of building up a holding in a project is to use launch pools run by the likes of Binance. These seem to be growing in popularity, appearing on an increasing number of websites. It’s really just a form of staking, which involves you staking tokens of a specified type against a project for a set period of time, during which you are able to claim your reward in the form of tokens in the project you’re backing. It’s a useful way for a project to expand its user base and profile.
I am doing this at the moment on Binance, staking BNB in order to build a holding in Benqi, a decentralized non-custodial liquidity market protocol. Benqi’s offering looks good, it’s current market cap is modest and so has plenty of room to grow significantly and it resides on Avalanche, a rapidly growing blockchain with relatively little in the way of DeFi offerings at present.
(I will be looking into Benqi in more detail in a later post).
Reallocating Earnings from Staking
I often use earnings from ‘normal’ staking to build a position in another project. For example, I love the Cosmos ecosystem and already have holdings in several of the outstanding projects there, but I am adding to these by taking earnings from staking tokens for the likes of Osmosis and Persistence and using them to buy holdings in Juno and Secret Network. I do this by swapping one set of tokens for another on the excellent Osmosis platform.
Crowd Funding Auctions
Over in the Polkadot/Kusama ecosystem you can currently earn tokens at no additional cost by backing projects seeking to secure a parachain slot in the crowdfund auctions. There are a limited number of parachain slots available, which are being awarded via a public auction to those projects that secure the most backing in the form of allocated DOT/KSM.
Projects encourage people to back them by offering free tokens from their own project treasuries. Winning project are planning to hand these out to their supporters over the life of the parachain (up to two years), when you also get back your staked DOT/KSM.
Without going on endlessly here, you can get further rewards by committing your DOT/KSM via one of a few DeFi dApps in the Polkadot/Kusama space, which are encouraging people to use their services by handing out token rewards from their own treasuries. So it’s a case of double-bubble!
It’s worth adding that these are quality projects we’re talking about, so it’s not as if you’re pledging your DOT/KSM against no-hopers. Because of this, I plan to keep hold of the tokens I pick up through this route in the expectation that some of the projects will turn out to be very successful indeed.
Airdrops
Airdrops can often seem to be falling thicker than confetti and it’s quite likely that some of what is on offer will turn out to be winners, however I am not talking here about your run-of-the-mill airdrops.
It seems to be increasingly common for projects launching into wider ecosystems, such as Cosmos, to offer free tokens to those people who hold tokens in some of the projects already live there. It’s good for the new projects because, if done well, it can bring them some great publicity and help grow their user base early on.
The new project normally takes a snap-shot of qualifying token holders at a specified date and you can often check your own status via the project’s website. Those qualifying then need to take some sort of action to claim their tokens during a specified window.
This is a new approach for me when building stakes in projects and I’m currently going through the process with two projects on Cosmos. As with the Polkadot projects mentioned above, these are good quality projects and I will be holding these long-term.
Pound Cost Averaging and Risk Reduction
For those projects where you are building a holding in a number of smaller bites, rather than in one big bite, there is one particular advantage that you enjoy, which is pound cost averaging. In simple terms this means you buy more tokens when the price is low and less when it is high, whilst avoiding the risk of buying at a peak should you buy your entire holding in one go. This is not to be sniffed at, especially in an environment as unpredictable as the blockchain is.
Opportunity Cost
Although the methods I’ve run through here involve no direct cost to acquiring your new holdings, there is one cost of sorts that you might want to consider, namely the opportunity cost. Even where I haven’t actually spent any money to obtain the new tokens, it may be that tokens staked in a launch pool or committed to the Polkadot auctions could in fact have obtained a greater reward elsewhere.
I think it is a good thing to be aware of this and in my own case I have chosen to accept this because I have a specific objective in mind and I see acquiring these new holdings as part of building a diversified portfolio, something that to me is essential in such a high risk space.
Profit and Pleasure
I won’t shy away from the fact that I expect some of these projects I’m building stakes in to turn out to be duds, but I only need a very few of them to grow hugely in order to make a significant overall gain. In any case, there is also a part of me that is happy to back some projects just for the pleasure of it because it’s always a pleasure to encourage talented people and to be a part of something new and successful
Until next time…
Renaissance Man
Earnathon – get paid to learn about crypto
The Usual Disclaimer
Please don’t take any of the above as financial or investment advice. It is intended to be nothing other than a little entertainment and information sharing. Always, but always, do your own research before committing your money to anything.
