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Family business

My dad came by today. He had a hospital appointment to deal with a chronic heart condition, and I had to drop him off and pick him back up after. He dropped by a couple hours early, so I tried to fill him in on our investment partnership. He bought some BTC in 2017 and put down half the capital for the mining rig that I’ve operating for the last three years. I tried to explain to him how I doubled his money in the past six weeks on BadgerDAO: “So I know this next sentence won’t make sense, but here goes anyways; BADGER is a governance token for the Badger decentralized organization, and Digg is an elastic rebasing token that tries to follow the USD price of Bitcoin by dynamically expanding or contracting it’s monetary supply.” He just laughed.

The girls came with me to pick him up, and we stopped by Cold Stone for a treat before heading back to the house. I’ve been giving them a lot of leash lately, trying to reduce my own stress level. My dad seemed overbearing when I was younger, and I seemed to be emulating his authoritarian parenting style. I’ve been working on Elder’s application for GalileoXP, and the more thought I’ve been giving to unschooling them, the more I’m letting go. I used to limit their screen time to an hour a day and try to control their schedules, but I’m just letting go. As long as they keep up with their chores, then I’m fine with them watching TV all day. We’re still fighting, but I think things are improving.

If I really wanted them to stop watching TV, then I’d cancel the Netflix and Disney+ subscriptions. The point is that I shouldn’t have to. I need to find alternatives that they enjoy more. I’m hoping I can get her enrolled in Galileo and she’ll latch onto something that she enjoys more than watching sitcoms. I figure it’ll take a few weeks for them to adjust to this new way of doing things. I’m still prompting them for outside time and for Elder to sign onto school when it’s time, but they’re starting to understand that as long as they do what’s expected of them, they’re mostly free to do what they want. Which was the main lesson my dad tried to teach me growing up.

I was telling Dad about my plans for early retirement and Elder’s unschooling, and he just laughed. Missus walked into the room and rolled her eyes at me and they both had a laugh at my expense, which is fine. I’m the dreamer in the family. Luckily for them.

I’ve promised to talk about how I’m teaching the girls about money, but that’s going to have to wait for another post of it’s own. Elder is thinking like an entrepreneur already, which is great. Today she actually cooked lunch for her and Younger without prompting, which blew Missus’s mind. It was just baked beans, green beans and a marshmallow for dessert, but you know, baby steps.

I’ve been thinking a lot about the concept of a “family office” and have been giving thought to having a family business, and generational wealth. Twenty one million BTC divided by seven billion people is … several orders of magnitude less than what I have right now. As long as don’t do anything stupid and can hold on to what I have, then our family should be secure for generations. I found a podcast that focuses on multi-generational wealth, and one of them focused on the business of family. Apparently people actually draft up family constitutions to govern how families operate and after looking at a template for one, I thought it was a great idea. I told Missus I wanted to start monthly family meetings next week.

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Overplaying my hand?

gray monkey under sunny sky

Thoughts on over-diversification, taking profits, and doubting oneself.

We’ve been playing a lot of Santa Cookie Elf Candy Snowman, a Christmas-themed version of Taco Cat Goat Cheese Pizza. It’s a card game that involves a lot of hand-slapping, and I’m frankly pretty terrible at it. Elder loves it, and I even played a game with Younger earlier, even though she’s really to young to really play it.

I mention it cause I’ve been making a lot of moves lately, and have a bit of nagging self-doubt about whether I’m making the right ones.

Voyager

First up, Yoyager Digital. I’ve been very vocal about how this has been the trade of the year for me. Back in November, when I was still very disciplined about trade planning and capital preservation, I stumbled across them via BitcoinTreasuries.org, and immediately aped in. Up until that point I was putting positions in my value average algorithm, and slowly scaling into my 2% risk positions over the course of thirty or ninety days. Not with these guys. I have a very strong conviction on exchange plays, namely that the house always wins, so I threw the full capital allocation at it, about four thousand dollars.

Since then my position is up over three thousand percent, and is worth six figures. It would have been more amazing if the rest of my portfolio hadn’t gone 4x during that same time period, but Voyager is nearly tied with GBTC for my largest holding.

I’d been looking for an exit, so I was waiting for the Coinbase S1 to be released so that I could get a look at the financials and try to make a comparison. These came out last week, but had the 20Q4 numbers, so it was really hard to make a direct comparison to the current valuations between Coinbase and Voyager. Coinbase is rumoured to have a $100b valuation, while Voyager has a $2.5b market cap. Still, looking at the revenues and profits, I’m not sure I can make a direct comparison. Basically I’m looking to see if Voyager seems over or undervalued in comparison to Coinbase, and I still don’t think I can make a solid call on that.

What I can say is that I haven’t used Coinbase much over the last couple years. I’d been relying on Gemini for the most part, and used Kraken for a while to play with leverage. I like Voyager though because they were offering interest on deposited tokens, so they were comparable to BlockFi, but without the withdrawal limitations. Of course Gemini and others are offering these yield opportunities, but Voyager became my go to for all my normie friends.

That said, given my current goal to move out of brokerage equities into self-custodied crypto, I felt the need to take some profits on my position last week. I sold a sixth of my position, about $20k, and made it all back yesterday when BTC shot up and all my cryptoequities made 20-50% gains. Totally insane. I’m not really sure how much more Voyager can run, but I expect I’ll continue taking these small exits over the next few months as the bull run continues, at least until the Coinbase IPO comes out. I don’t really know how to value these two, but I’m worried that Voyager is still extremely overvalue. I’m also worried that I’m extremely overvaluing it, and that selling here is a mistake on par with selling my Netflix stock in 2008 to buy a used BMW. No looking back, I guess.

Digg/Badger

I wrote about my DIGG strategy yesterday, but I had a bit of doubt earlier today after looking on the forums. These seigniorage tokens like Basis Cash and Klondike have been getting hammered lately, and my “return to peg” thesis might not be as sound as I suspected. I actually talked one of my friends into coming along with me for the ride, and after the price continued to decline I finally decided to go into a lesson on risk management and trade planning. Whoops. I actually did a post-trade trade plan on this public TV chart, so hopefully that will help get us on track.

So the actual reason for the Digg dump was because Badger got listed on Binance earlier this morning, and there was a bit of a rotation from a whale that got wind of it and rotated from Digg to Badger. I actually used the opportunity to unload my Badger claims to USDC, and stuck them in BlockFi as preparation for my annual salary/2021 tax payments. There wa a bit of a sell off, so it looks like the timing was good. I’m going to continue to sell of my weekly Badger rewards. I honestly don’t want Badger to run much from here, since I’ve already lost so much in inpermanent loss when I staked at eight dollars. I really need BTC to have the mother of all runs to balance things out so that I can pull my LP out.

My doubt here is that I might actually be better off just leaving my Badger and DIGG rewards unclaimed until they are worth much more, or that I should be selling the DIGG and keeping the Badger. It’s so confusing. I just want to take some profits, and save up some cash.

Unfederal Reserve Token

I don’t think I’ve actually written about $ERSLD here before, I really haven’t done any analysis on it. The only reason I aped in it was because my $$PRIA bro Tres was shilling it, and was buying a lot of Uniswap tokens earlier this winter. I think I threw a total of .1ETH at it, and it happened to do a 4x recently. So I sold everything today. It was only $700 worth of profit, but of course I had to second guess myself and wonder if I’m doing the right thing. This thread does make the project look very strong, so who knows, maybe it’ll come back down and I’ll have an opportunity to re-enter. Or maybe it’ll run up another 4x from here and I’ll curse myself.

The fact of the matter here is that the diversification is killing me. Between my equities and crypto positions, I’ve probably got close to a hundred open positions right now. That’s too much, and I can’t worry about that many. It’s my own damn fault for getting myself here. Spray and pray might have seemed like a good strategy a few months ago, but it’s time to start cutting the weakest links. I already cut all the losers out from my equities positions, but because gas is so high, it’s not even worth cutting loose these Uniswap tokens. I might have to burn gas just to take the tax loss next year.

I’ve been very aggressive about my investments, but now is the time for me to be very aggressive about profit taking. I made and lost a lot of money during the 2017-18 market, and there’s no way I want to repeat that mistake. They say alts are how you make it, and BTC is how you keep it. I spent the last several months setting up my positions, and when they start pumping I am going to reap what I’ve sown.

There’s a lot more that I want to write about the macro environment, especially what’s been going on with bond yields, but that will have to wait until next time.

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Evening pages

This weekend was a blur. I took the kids to the park for a couple hours yesterday, and took Elder shopping on Saturday for some clothes and shoes at the thrift store. I filed our 2020 tax return (yay) and discovered that I left a school tuition credit on the table for our 2017/18 returns that’s worth about $5,000 altogether. I also spent an inordinate amount of time trying to reconcile my BadgerDAO investment holdings between my daughters, my dad, and myself. It was an unholy mess, and while I didn’t finish, I did make significant progress on what portion of the Badger LPs came from which funds.

From there though, it’s hard to figure out what the rewards were. Since we made a total of four investments into the pools, (three in Uni, one in Sushi, each with their own rewards,) it’s impossible to determine exactly what percentage of the original Digg airdrop should be allocated to each of the investors. Luckily my daughters contribution is 50/50, or I might have just lost my mind. And it just gets worse after the Digg airdrop, since we pulled liquidity from the Uni pool and used that to fund our stake in the Digg LP. Since the original LP stakes are up so high though, I think I’ll just wind up taking the subsequent Badger and Digg reward as a fee of sort. I’ve actually made two claims over the last couple weeks, I’ve staked the DIGG back into the Sett, but sold the last claimed Badger tokens for USDC and put them in BlockFi in preparation for taxes. I still have another Badger stash from last week that I was planning on selling, but didn’t get around to it before this dip. It’s almost recovered though, so I will probably sell it as well.

I’m making over 2 Badger a day from the Setts, which has fluctuated between $100-300 during the last month or so. I figure at this point I’ll start selling it for USDC, which I’ll leave in BlockFi or in a Yearn vault. This way I can be sure to take profits, save up a year’s salary in preparation for “retirement” and have enough cash on hand to max out my IRA and pay taxes next year.

The DIGG that I’ve been claiming has gone back into the Sett. I figure that despite the sell off, Digg should return to it’s BTC peg as the bull run resumes. It’s a risky strategy, but we’ll see how it plays out over the next couple weeks.

I also spent several hours looking over Yearn V2 Vault code, figuring out how they work and trying to determine how the yield is calculated. The crvSETH Vault was showing almost 2300%, which I was sure was a bug, but I wanted to calculate how it was wrong, and actually learned a lot. I aped in as well, and figured out the yield is actually closer to 30-40%. The underlying Curve pool contains Synthetic ETH (not sure what the point of that is…) and ETH. Staking provides you with sETH, which is staked in the Yearn vault. These new vaults are much cheaper than the V1s, which relied on users moving in and out of the pool to trigger the vault’s harvests and rewards. In V2 vaults, these have been outsourced to Keepr bots, which claim an amount of the profits in as a reward for performing these actions. It’s pretty smart.

I parked a good portion of my ETH in this vault, cause I figure I’m not going to be doing much else with it for the time being. I’ve gotten the first round of funds from my IRA rolled over to my new FTX account, and bought a good amount of BTC, wBTC and ETH. I’m waiting for my banking card to come in the mail, then I think I’m going to buy a Lattice1 to use as a hard wallet. Once I have that setup and my ACH has cleared, I’ll tuck the BTC in a hard wallet, stake the wBTC in defi, and trade some of the ETH for DPI. I may use it to start a proper BED (BTC, ETH, DPI) Set under the Homebrew.Finance banner that has proper NAV issuance, perhaps even an LP. It all depends on how fast I can move funds over. If my brokerage is going to take a month to send a wire each time, then it may be slow going.

I took some profits on Voyager last week, for the first time. About a sixth of the position, at a 2600% gain. This will cover my next disbursement. I’ve also sold off a few thousand dollars worth of GBTC, following the value average protocol rules that I started a year ago but never automated. I’m about ten weeks ahead, which means I’ll be selling off a lot more if the price remains steady. If everything goes to plan, I won’t be selling off fast enough to bleed off the gains. I’ve also been liquidating the weakest links in the portfolio. I sold off all the losers weeks ago, and am now starting to cut the ones that are underperforming. We’ll see how fast this next withdraw request goes. Since it’s a third party request, it requires a wet ink signature and requires manual intervention from my brokerage. I’m fine with the delay, I think, since it’ll keep me from doing anything too rash.