The de-risking continues. Badger dropped just enough past the last major support lines last night that I felt compelled to pull a quarter of my funds out. I completely liquidated my Sushi LP, keeping the wBTC but converting the Badger to USDC via Binance. I spent a lot of gas. I haven’t even added it up: unstake bSLP, withdraw SLP (twice, as vfat mis-calculated the gas,) approve SLP on Sushiswap, withdraw liquidity, send Badger to Binance, trade Badger for tether, trade tether for USDC, withdraw USDC to wallet. My god, what a mess. Here’s hoping I can get the cost basis right on that one.
I’m not really sure what’s precipitating the selloff, maybe it’s people like me who are just profit-taking. There’s a lot of bBadger moving to Pancakeswap on BinanceChain, but that doesn’t require selling Badger, so I’m not sure what’s going on. I’m still keeping an eye on things. BTC is up today, which means that Badger is falling against BTC, but as long as it can hold in USD here I may hold on. If not, I’ll have to dump the remaining Badger LP. That belongs to commingled pool of funds that belongs to the “family business”, so I’d have to split the wBTC proceeds with them — USDC profits would be held for taxes and “management” fees.
I’m feeling pretty good about it even considering the heights from which it’s fallen, down about twenty percent overall, based on my eyeball figures, which mainly consists of a series of daily screenshots saved in a notebook. I’m now just over halfway to my retirement goal. I started going over the Curve vaults yesterday, trying to put some sort of risk matrix together based on the underlying tokens. I’m thinking some linear algebraic matrix to weigh each token might work, but I have no idea how I’d even lay something out like that in Excel. I’m probably overthinking it way to much as well.
I might as well just pick a Yearn vault and call it a day, but my brain is locked on the problem and won’t let go. The reporting end of it is probably what I’m going to be focusing on most. Once deployed, how to I monitor the funds that I have and the interest being generated? How do the web front ends for Curve and Badger work, and how can I build my own dashboards to track performance over time? Can I do something with TheGraph, or do I need to use web3 to write to a database or spreadsheet? Figuring out how to do that would be a valuable skill.
So the big news this weekend in crypto was the launch of the Big Data Protocol’s liquidity mining program. The project quickly locked up six billion dollars in it’s BDPMaster contract, causing concern for some. Sam Bankman-Fried’s Almeada Research apparently threw in one billion on their own. I gave myself a minor panic attack as I pulled liquidity from several pools and projects to ape in, burning about five hundred dollars in gas as I exited positions that were earning a measly sixty percent interest.
The project itself is a bit underwhelming to me, it’s founded by an existing data provider company, basically they’re using the tokens to provide access to their feeds. They’re actually using two tokens, $BDP, which is the utility token, and $bALPHA, which is a subscription token that one can burn for access to the data sets. BDP is earned by staking one of twelve assets (wBTC, wETH, USDC, Tether, et al,) for up to a week, at which point no more BDP tokens will be minted for at least two months. The bALPHA tokens are released by staking BDP and bALPHA LP tokens, and those two pools were still pumping quadruple digit APYs three days after launch.
Despite my excitement yesterday, I feel like I was probably late to the party, and that ultimately it will wind up a bit like treading water, a lot of physical activity that gets you nowhere. The worst part is that I am pretty sure I read about the BDP launch some time ago, but wasn’t really interested in it. I just FOMOed in because of all the excitement. I’ll be lucky to earn my gas fees back, and I honestly deserve to get rugged or lose my capital over this.
I’ve forced myself to write before I access any of my wallets. Younger woke me up before dawn this morning and I laid in the dark in that in between sleep state thinking about this, and knew that I needed to write about it. I’m forcing myself to write five hundred words before I allow myself to check my charts and wallets. My CoinTracking is probably going to have at least thirty transactions from yesterday. Sometimes I am a fool. The GasNow plugin in my web browser is mocking me: gas is only eighty, don’t you want to check? Oops, now its ninety, everyone is waking up. You better check your IL and get out why you still can.
I dreamed about changing my LinkedIn profile to cryptoanalyst. Nansen.AI posted a tweet that their hot contracts feature alerted their pro subscribers to activity on the BDPMaster contract Friday night. I imagine having that information could have paid for the $1500/month subscription fee. I signed up for a trial. The basic service has some interesting features, such as address alerts, which an address for tokens or transfers or, most importantly new contract deployments. I imagine this would be very useful for watching star developers like Cronje or Banteg, or Uniswap factories to see when a new LP gets created. I can only begin to imagine. I had been looking at a GlassNode subscription a few days ago to get access to their current data sets, and the number of metrics that they have there are just staggering. Their cost is much cheaper than Nansen, that’s for sure.
I’ve already got a Messari subscription, and it’s not doing that much for me, to be honest, but it’s a business expense, so I justify it along with the 2021 CoinTracking subscription. I still have a day job, and projects to do that not interest me in the slightest anymore. I figure if I can just survive this market for a few more months without doing anything stupid (a big if!) then I just might make it.
My BadgerDAO holdings are giving me some pause, since most of my positions are tied up in LP or staking there. DIGG, which I had started to hoard, is hemorrhaging, but Badger, which I’d been selling, is holding. Go figure. I’m hoping DIGG will start moving once BTC makes a new ATH, but it looks like my previous prediction about it catching the peg with BTC’s price was either naive or will take a lot longer than I predicted.
So for now, I’m going to take a deep breath, slow my thrashing, and try to tread water for a little while longer while I assess my surroundings.
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.
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.
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.