Would you rather: 10% APR or 1% shot at $10k?

Crypto drawdowns don’t normally scare me, but fear on the timeline (due to crypto decoupling from stocks in the wrong direction) & tuning in to an UpOnlyTV livestream with Cobie & KeyboardMonkey, had me asking myself some questions:

• Do NFTs have much more to fall?

• What if paying $10k for an NFT is never normal again?

• What if people stop using ETH after NFTs die?

• Is ETH justified having 20x the market cap of AVAX or SOL?

Everyone needs to ask themselves these questions about every single asset they own. You’ll either strengthen your long-term conviction or smartly be able to cut your losses & move on to another play.

Read This About Tokenomics

Related, I recently read this tokenomics article by OnchainWizard. It’s one of the best things I’ve read on tokenomics & provides a much better framework than my scattered questions above.

Highly recommend reading the whole thing (5 min), but I’ll TLDR:

• Beta vs base pairing - i.e. an “alt” on Ethereum usually has ETH as its base pair & is higher beta, meaning it’ll out-perform in a bull, under-perform in a bear

• Value accrual - does the token cash flow? Earn interest that exceeds the token’s rate of inflation?

• Supply inflation/vesting - are there any upcoming unlock events where people are likely to dump tokens? Does the token naturally have a high rate of inflation?

Figure out whether you think each of these 3 factors is bearish/bullish for a token in the short-term & that may be a good indicator of how it’ll perform…

Plays

I sold about .5 ETH worth of PYR. This was our “safest” crypto gaming exposure & I’d been holding on to it doubting it could keep going lower, but the truth is, it’s still got a $200M FDV & at brief glance, user activity metrics didn’t look promising. We take about a 50% loss here, but I’m happy to save what’s left.

We still have about $500 in riskier crypto gaming stuff (ALU, FINA, etc) but it’s hard to imagine their market caps going MUCH lower. I’m probably just lazy though & will sell them in the coming days.

Sold a small amount of OHM I’d forgotten about (just swapped it into AVAX).

The CryptoPunk floor is now 46 ETH, just $84,000! Call it brainwashing, but punks are still the dream NFT for me & I’m not sure that’ll ever change for many NFT collectors. Let’s have a good year & be able to afford one!

PoolTogether is a unique “DeFi” app that offers no-loss prizes. Instead of depositing your funds somewhere & earning 10% APR (not very meaningful), they manage a pool of funds & all the yield goes to several "larger” prizes. There’s no risk of loss for users (you’re guaranteed back your full deposit at any time), & your chances of winning a prize is proportional to your share of all funds.

I’m trying it out with $200 USDC (on Polygon, so low gas) & that gives me a daily 1 in 120 chance of winning a prize (prizes start at $5 but get as high as $10,000).

They’ve been around since at least last October but I just recently heard of them because they’re crowdfunding legal defense by launching an NFT collection (state of NY suing them for being gambling). Hopefully the SEC doesn’t have any issues with “NFT collections as crowdfunding legal defense”!

StepN Update:

China is apparently enforcing a ban on foreign GPS trackers in China, & as a result StepN is enforcing a ban of Chinese users (previously unenforced). Chinese users had until this evening to sell their sneakers before being banned from the app, which caused the sneaker floor to fall from 12 SOL to 6 SOL (since rebounded to 9 SOL).

P.S. *technically* users in the US are also not allowed the use the app (it’s the typical “USA, North Korea, Cuba, Iran, etc.” grouping) but I haven’t seen any indication they plan to enforce that, & it’d honestly be devastating to their entire business as I’m pretty sure their largest userbase is in the US.

—Luke