The recent crypto crash taught me I like Hive/ Leo and Stables!

It was a pretty exciting April and early to mid May, enjoying the relatively stable crypto highs and the insane DEFI yields, but this recent 30% dip has made me appreciate my stables and my Hive and LEO.

This is because crypto can suffer from not only 30% dips, but also 50% and 90% (remember December 2018), and if that crypto is staked in DEFI the yields are likely to follow suit, given that yields are paid in crypto!

So crypto staked in DEFI can suffer from a double dip whammy - declining percentage yields on declining capital value.

However, with Stables staked in DEFI you can only suffer yield reduction not capital depreciation (assuming stables don't go tits up) and with Hive and Leo you can only suffer capital depreciation not yield reduction, because you always yield at 12% or there abouts.

Below I've tried to compare the three....

Dodgy DEFI Crypto....

Below I've imagined a scenario in which you have an initial $50Ks worth of crypto staked in DEFI with a 50% yield, which is (conservatively reflective) of what many of us have been enjoying recently.

Then I've imagined two further scenarios:

• A mild crash - in which there is a 50% reduction in the value of that staked crypto to $25K and a corresponding reduction in yield to 25%, and then...
• A severe crash- a 90% reduction to $5K and a corresponding reduction in yield to 5%.

The results are charted below:

• $50K @ 50% yield = $25K a year, or around $2K a month
• $25K @ 25% yield = $6250 a year, or $520 a month
• $5K @ 5% yield - $250 a year, or $21 a month

So today (or at least three days ago?) that $50K stake was earning you a living wage, a 50% dual crash (in value and yield) turns this into a second income, and a full on dual 90% crash turns that into one Dominos a month.

A severe crash here means you're 100 times worse off than when you started!

Stable Returns with declining Yields - Better Protection!

If you had $50K of Stables stacked then if yields dropped from 50% to 25% to 5%, you'd be A LOT more protected and end up with the following:

• $50K @ 50% yield = $25K a year, or around $2K a month
• $25K @ 25% yield = $12.5K a year, or $1000 a month
• $5K @ 5% yield - $2.5k a year, or $200 a month

Given that the values of stables can't fall, even a 5% return ends up being a reasonable second income, and even with a 25% crash you've got a 'survival' income.

A Severe crash here means you're only 10 times off worse than when your started!

NB these stats are the same if we assume the reduction in crypto value and stable DEFI yields, but that's unlikely given that yields are generally paid out in crypto!.

Hive/ Leo with declining values and stable 12% yield

Here we start off with relatively lower returns and the returns and once again the returns only decrease by 10 times if we assume a 10 times drop in value, or 90% reduction.

• $50K @ 12% yield = $6000K a year, or around $500 a month
• $50K @ 12% yield = $3000K a year, or $250 a month
• $50K @ 12% yield - $600 a year, or $50 a month

Final Thoughts

Of course if yer only sticking to stables and hive/ Leo you're less likely to enjoy the potential upsides of other cryptos and, if you're a DEFI degen, you could miss out on returns even better than 50%.

However, being Vested in stables and Hive/ Leo does offer better protection against a downside.

My own personal strategy is to have a mix of cryptos and stables in Defi project, naturally.

One final thought is this: why am I so heavily Vest in Hive and Leo, the returns are TERRIBLE!

Someone give me a rational pill!

Posted Using LeoFinance ^Beta