Crypto prepping continues

I spent most of today focusing on crypto and equities.

On the equities side I put trailing stops on several of my large positions, including Amazon, Tesla, NVidia and Netflix. All stops were calculated as a dollar amount equal to two percent of my total portfolio value. These positions are large enough that I don’t anticipate any of them triggering as part of any short-term movement, but they’ll serve as circuit breakers in the case of any major downturn.

I spent a good deal of time looking at all my positions and watch list, trying to see if there was anything to be gleaned from the TD Sequential setups. I’m using it as a guide, but haven’t developed any hard rules about it yet. Basically I’m looking for any positions that have moved above any sell signals, and am setting stops on those positions.

As far as crypto goes, my NEO position closed yesterday, after bag holding for almost two years I let it go at an eighty percent loss. It had a bit of a run lately, but I’m going to stick to tokens that I actually care about long-term. For that reason, I’m also preparing to unload my OmiseGo, Lisk, and Civic tokens, at some substantial losses. Also, I’ve put my Brave tokens, BAT, up as well, as its had a nice run lately. I’m almost flat on it and am holding a four-figure position on it. I’m also putting a stop limit up on 0x, which I once had high hopes for. Maybe DeFi will lead to some more growth, but for now it’s up on the block.

Since most exchanges don’t support trailing stops, I’m going to have to keep an eye on these positions, and adjust them accordingly. I’ll look for further TD Sequential sell signals, and tighten them as needed. However, I am investigating some automated tools to make this happen.

Right now I’m basically harvesting losses. I’ve used taxes as an excuse not to make any trades, but I don’t think that’s going to be a wise choice in the coming months. I might as well take some losses now and offset some of the massive gains that will be coming later on.

IDEX

Speaking of massive gains, my IDEX holdings have absolutely exploded. After being underwater for most of the last year since I started staking and running a node, it’s not only recouped its value but has gained almost six times over the past month. A few days ago it was listed on Binance and shot up forty percent almost immediately. I’m in a bit of a pickle. I’m staking and earning a small reward each month as a result. But the value of the tokens has appreciated so much now that it would be irresponsible not to take action. If I move the tokens to the exchange though, I have to wait another seven days before they can stake again.

I guess in this case it makes sense to lose the stake and prepare to take profits. I have a feeling that there’s going to be a lot more gains in store for IDEX in the near future, but I need to think about protecting my capital and taking some profits off the table.

It’s a hard decision.


There are other assets that I’m delaying action on.

I considered taking some off my GBTC position off the table today but decided against it since its slightly underwater. A full sixth of my IRA is in it right now, and even the slightest movements cause oversized actions to my balance. I can only imagine how it is going to look when we get to six-figure bitcoin. I’m used to it now, and hopefully I’ll be able to stand it as we make the next leg up to new ATHs.

I’ve also made a nice sum in ChainLink, all the way back to the ICO. I haven’t touched it the entire time, but recent pullbacks are making me consider pulling it to the exchanges and setting some limits on it. Not yet though.

I have some other tasks that I can work on in the meantime to delay any overreactions. I sense myself getting a bit manic about things right now, and the last thing I want to do is pull out of too many positions. There are some tokens that I’ve been wanting to get exposure too, thinks like Comos/ATOM, REN, and ALGO, but I’m hesitant to move anything out of cold storage to take it. So I’ll have to free up some funds elsewhere. All I know is that I don’t want to touch my ETH for now.

For now I’ll put stops on these gainers, sell off the rest of my losers, and then wait for buying opportunities in the others. I’m playing with a small stack right now, and I’ll use the next few weeks to solidify my rules. And making sure that I have the discipline to stick to my two percent capital preservation rule is key.

In the meantime, I’ll work on codifying my decisions into code, and wait for the opportunities to come to me.

Every day is a gift

That’s why they call it the ‘present’.

I came down this morning and got halfway through my morning routine thinking it was Monday. I didn’t get up till after seven, which is later than I like. I asked the computer for the weather, and Alexa finished up with an “enjoy your weekend”. At first I thought it was bugged, but then it slowly dawned on me. The confusion didn’t break until I looked at my phone and saw that yes, indeed, it is Sunday. Now it’s like I’ve been given a whole day to get caught up on things.

It’s already hot outside, although it’s only in the seventies. It’s humid, and the forecast calls for a high of ninety-six. I usually cut the grass Sunday mornings before it gets too hot, and I’m already dreading it. I’ve got to run to the grocery store again today, despite spending over two hundred dollars at Harris Teeter yesterday, because I forgot my list. I will be going to Food Lion instead, sans children.

I don’t anticipate being too busy today. Keeping the kids busy is usually the most challenging part of my existence, that and keeping them from trashing the house. I do have a long backlog of things that I could do if I wanted, but the only thing urgent right now is getting dishwasher detergent.

After some consideration, I’ve decided that I need to replace the deck boards instead of flipping them over. Most of the existing screws are too far sunk into the boards to be backed out, and dealing with that seems like it will be more trouble than it is worth. New pressure treated boards are only going to cost us five hundred dollars, and I shouldn’t even have to cut many of them. I might wind up scheduling the rehab for the fall, so I’m not out there in the sweltering summer heat. The boards will hold up until October, I’m sure of it.

My cryptocurrency mining rig has been sitting silent for several weeks now. I’m conflicted as to what to do with it. The cards are almost three years old, and I might be able to sell them if I clean them up. I saved the original packaging just for this reason. I’m not really up for buying new ones though, as managing the mining operation is a bit of trouble right now and not really of the greatest interest to me. I have over a dozen coins that I’ve mined from it, and I don’t even have it setup so that I can access the wallets for them. Only a third of them are worth more than a couple hundred dollars, but even they don’t seem like they’re worth the trouble of selling at this point. Many of them are doing well, but it seems like we’re far from an alt season.

DeFi is a bit of an exception, my IDEX stake seems to be doing pretty well right now, the tokens have soared in value, but my pricing calculator is screwed up, so I’m not even sure exactly how much profit I’m looking at. I’ve decided that when it surpasses the current value of my car loan I’ll consider cashing out and paying that off. Right now, it’s only providing about thirty dollars in income, which isn’t bad considering I haven’t had to touch it in months. I actually don’t think I could if I wanted to. I think I lost the SSH keys to my AWS instance. Oops. Thankfully I can just move the tokens through my wallet if I need to.

In fact, maybe today I’ll just relax. I’m not even sure what that means, or if I entirely understand how to do that. Relaxing still involves a lot of work for me, usually a lot of cooking and cleaning at the minimum. I think I’ll go run to the store, come back and knock out the grass, and maybe spend the day reading and playing with the kids. Of course at some point I’ll likely open up my Trello board and decide that there’s something that I need to work on, but at least for now I can enjoy the possibility.

Vacation!

black DSLR camera near sunglasses and bag

Prepping for a trip, and making sure the future is secure

Tomorrow is the Fourth of July, which means today is a national holiday. Whee! To keep from going insane, my wife has taken off a few days next week. I took Monday off as well, and we will be heading out tomorrow morning to spend a few days with my father in law. Hiking, canoeing, and fireworks will ensue. We’ve got a lot of work to do to get the house ready for our departure. I’ll be cutting the grass and weed-eating, then I need to get our security cameras connected to our new ASUS ZenWiFi AC access points before we leave. We’re also hosting our quarantine family over movie and game night.

I won’t have to worry about Zombie, LLC for the next couple days, but I’ll probably be doing some work for my consulting projects. I just picked up another client yesterday, for a local political advocacy organization. I already got the wordpress site setup, and the client is going to handle the copy and content, so it should be a quick win that hopefully won’t serve as a distraction from my main project, which I’m into the third month on.

It’s Friday, which means that my cron jobs on my workstation upstairs is about to purchase twenty five dollars of BTC and transfer it to the wallet belonging to one of my daughters. All I have to do is keep the funds loaded, since there’s no way to initiate a funds transfer over API. I could do it using the exchange’s automated service, but they’d charge over a dollar for the transaction.

Since it’s the first weekend of the month, it’s probably a good time to review finances and take some optimization steps as well. I’m in the process of moving USD out of my daughter’s Lending Club accounts, converting it to BTC and dropping it in their BlockFi accounts, where it will earn a higher percentage yield. My own BlockFi account is earning a nice amount as well.

My IDEX masternode seems to be paying off now as well, after several years of middling returns. The IDEX token has doubled in price recently, and daily volume has been picking up, so I’m anxiously watching it to see how things progress. I’m currently hosting a level one node, and am hoping I’ve got enough staked that I’ll be able to run a level two node when it’s released.

I was reading something earlier this week that said that one doesn’t have to hyper optimize everything, that it’s ok to be happy knowing that you’re on the right path without worrying that you’re milking every last percentage point out of the markets. I’m currently holding positions in over three dozen publicly traded equities, and have at least a dozen cryptocurrencies in various wallets. Less than a third of them are even worth two percent of my portfolio, so I’m not getting caught up in micromanaging every one of them. Even the recent parabolic run on XHV, while placing it squarely in the top off the profitable coins that I’ve mined in the last two and a half years, hasn’t made my rig profitable.

And that’s why I turned off my mining rig, named lambo1, a few days ago. Managing it is just not worth my time right now. Finding coins to mine is a crapshoot, and keeping the blockchains current for a dozen different bags is just too cumbersome. I’m going to have to spend some time figuring out a way to not only manage what I have, but to make sure that I have documentation packed away in case something happens to me.

And that goes for all the things I’ve mentioned here today. If I was incapacitated, my wife would have to call in an expert just to retrieve my Bitcoin and Ethereum. Showing her how to use my hardwallet has been on my todo list for several weeks. Now that I’ve got a home intranet setup, I can start documenting all the various components of our finances to make sure that everyone knows where everything is. It seems like a great way to make sure that my kids know about the investments that I’m making for them and the family, and that they are crypto-natives as they grow up.

I mean, that’s why I’m into this whole blockchain thing in the first place, isn’t it?

IDEX staking: lessons learned

In our last part on IDEX, we discussed how the decentralized exchange aims to incentivise their infrastructure roadmap with staking. In this part, we talk about our experiences implementing our node.

For the past 18 months or so we’d been running an XDNA masternode on an Amazon AWS instance. In July, following a 90% drop in price of XDNA during that time, we decided to try and rollout the IDEX node. Unfortunately, we ran into some compatibility issues between XDNA, which was written for the Ubuntu 16 Boost libraries, and IDEX, which was supported on 18. Rather than spend a lot of time trying to enable legacy Boost libraries for Ubuntu 18, we decided to dump the XDNA masternode and just focus on IDEX instead.

The deployment from Github to implementation was simple enough. The only issue that we encountered at first was that we were still holding legacy AURA tokens, which had to be swapped for the newer IDEX tokens. This delayed our staking by 7 days due to the staking requirement, but once we waited and signed our proof of stake we were good to go. All we had to do from there was make sure our server was up, and collect our rewards.

We immediately started having stability issues. The node wasn’t able to keep up with the data and stay in sync. Even though the hardware requirements suggested 2GB of memory, it appeared that others were having problems as well, so I bumped things up to a larger instance. The system was able to run better, but still experienced intermittent issues. While issues on the IDEX Github repo seemed to be going without response, there were several IDEX staff on the project Discord server that actually seemed to respond to people asking for help.

The issue with these small VPS nodes is that IDEX required a connection to a full-fledged Ethereum node, which is a bit much for a VPS with only 2GB of RAM to handle. I was actually referred to Infura, which provides Ethereum and IPFS APIs. Basically, they run the Ethereum node, and provide an API key that you can use for your web 3.0 applications. Ethereum as a service, basically. The free Core tier allows 100,000 requests a day, which is more than sufficient for the IDEX node, which averages about 82,000/day.

Once we implemented Infura, we were able to reduce our AWS instance down to a t2.micro instance. Bring our total monthly cost down to just over $9/month, about a third of what we had been running before.

IDEX payouts are based on two week periods. Nodes earn credits based on their uptime and stake size, and these tier 3 nodes split one quarter of the fees of the IDEX market amongst themselves. Our payout for the minimal stake amount was less than a hundredth of an Ethereum, and our shock at seeing this caused us to do some more research into how the staking model and payouts operated. I was able to find a earnings calculator, but the results weren’t promising.

IDEX staking earnings estimate, minimum 10,000 IDEX stake. Figures 9/4/2019

So it’s obvious that the doing the absolute minimum staking amount is not really worth the effort. And if I had done my due diligence from the start I may have realized this and maybe reconsidered my investment of time and money. I don’t consider this exercise to be a waste though. Beyond the the drawdown in value of the IDEX stake itself, I really haven’t lost much that I’m worried about in and of itself. With the hemorrhaging that altcoins have had over the last 18 months, daily volume on the exchange is down considerably from it’s all time highs. If this Redditor is to be believed, IDEX was doing ‘upward of 25 mil a day in volume’, which would considerably change the value of this calculation. There are lot of factors that need to be taken into consideration as to whether the market will come back and whether IDEX can maintain their lead, but one of my core beliefs is that during a gold rush, the sure money is on those selling the pickaxes. BNB token, IDEX and other tokens that allow taking profits from the trading volume of the exchange itself may be a better long term strategy than many of the various crypto projects that are born and die during the market cycle.

Ultimately, I considered IDEX’s long term roadmap when deciding to increase my stake. Although there has been no official word on when the tier 2 staking application will be available, those participating will earn 33% of the fees rewards, and 42% for the tier 1 when IDEX becomes fully decentralized. Ultimately, if IDEX is successful, ownership of a tier 1 masternode could be very lucrative. Plus I love these type of infrastructure projects, running mining pools and masternodes. I have decided to increase my holding of IDEX tokens to ensure break-even on the tier 3 node, which will hopefully put me into a position where I will be in a position to operate a tier 1 node.

With over two million dollars worth of IDEX tokens currently being staked, I may not be in the best position to participate, but if they do implement pooled staking then I should be in a pretty good position.

There are several concerns that we’re watching, mainly around auditability and the stability of the platform software, which we will leave for another update. For now, we’ll continue layering our limit orders to pick up more IDEX and figure out how we can manage our exposure to any further market downturns.

IDEX staking: decentralized crypto exchange incentives

In the first part of this series, we discuss how decentralized exchanges work, and how IDEX operates their incentive plan.

It’s been a while since we talked about cryptoassets here, so today I want to talk about some of my experiences staking with the IDEX platform. IDEX is a decentralized exchange platform, which means that it is a non-custodial platform for crypto exchanges. This is in contrast to custodial exchanges where your money is kept on the platform itself. This is traditional method of asset exchange, where the exchange holds your assets and executes your trades. This is how the equities markets have worked since for ever, and how the first generation of bitcoin trading sites worked: Mt. Gox, Coinbase, Gemini, Poloniex, et cetera. With the advent of smart contracts on the Ethereum platform, these types of non-custodial brokerages have sprung up, with the first, EtherDelta, being the first.

Instead of the exchange holding custody of the assets, which can lead to theft, as was the case with Mt. Gox and other exchanges, the users retain custody of their tokens. Operations are performed via the smart contract, which, while it does have it’s risks — the DAO hack for example — the exchange operator does not have access to the tokens. Users deposit their funds with the smart contract, buy and sell orders are matched on the order book — more on that shortly — and the smart contract makes the trade, minus a small fee, of course. Users can cancel their open orders and withdrawal funds at any time. Minus the risk of a black swan event like a contract failure or other hack, users funds are completely under their control and are safe at all times.

Now with Etherdelta, the first generation DEX platform, the order book was contained on-chain, meaning that posting buy and sell orders, or cancelling them, cost gas. This was expensive, and was subject to delays when the Ethereum blockchain became congested. What IDEX has done with their exchange is to keep the orderbooks off chain, which removes these two limitations. Now critics will say that this type of centralized order book isn’t decentralized, which is why IDEX has a roadmap to offload this infrastructure in a fully decentralized manner.

Phase one of this three part plan is offloading the trade history, which they’re incentivising through a staking masternode model. Those participating in this process split twenty five percent of all fees on the IDEX platform, which is 0.3 percent of trade volume on the platform. Payouts are about every two weeks, based on node uptime and amount staked. There’s a seven day freeze period on funds as well, which is important to note.

Our initial entry into IDEX was around July of last year. The minimum required staking amount of ten thousand IDEX tokens, was around fifteen hundred dollars at the time, and we averaged into our position over several months for around sixty percent of that. This was several months before the staking software was actually released, and not only was the general altcoin market tanking, but IDEX took a further hit after implementing KYC protocols to stay ahead of regulatory issues. The staking nodes actually went live in January of this year, but by the time we actually started operating our node, the value of our IDEX tokens, (and our stake) had dropped to less than a third of what it had been a year earlier.

In our next part, we’ll talk about our experience setting up our node infrastructure, and our profit results.