My Experience Launching an Axie Infinity Scholarship Programme

Hello readers! How has your week been? I hope everyone is doing well amid this Covid situation.

Today, we will be talking about one of my most sought after and requested review and that is: How to start an Axie Infinity Scholarship programme, how to breed and just more guides on getting into Axie Infinity.

Axie Infinity

The game’s idea and inspiration was taken from Pokemon and  you can battle, collect, raise, and breed Axies. That is important to what Axie is, but the ecosystem is way more complicated than how simplistic it all sounds.

Image for post

Behind the game itself, it is powered by the Ethereum blockchain, meaning it is open-source, and any player from any part of the world will be able to participate. 

As long as you have a wallet that can hold ETH and buy/sell Axies or crypto tokens, you can access the game wherever you are.

If you are new, or have yet to read my more recent posts, then you must be new to Axie Infinity as well. What the heck is this funny sounding thing?

In essence, Axie Infinity is a play-to-earn game which exploded in popularity after a video documentary about the game in the Philippines blew up on Youtube.

SLP!!

You can earn in game tokens called Smooth Love Potion (SLP) when you win in the game in either Adventure mode (PvE) or Arena Mode (PvP). This SLP is different from normal games in that, the SLPs earned are ERC-20 tokens that can be converted into real money like USD/SGD/PHP. They are crypto tokens based off the Ethereum blockchain and can be converted into other crypto tokens as well.

If you want to understand this in greater detail, you can check out my post here before moving on to read the rest of my post.

Scholarship Programme

If you are reading this, I will assume you already know the basics to how the game works, the tokenomics of AXS and SLP, and how scholarships work, all of which are covered in my previous article.

Are scholarships a Ponzi or pyramid scheme? Well, no.

In a pyramid scheme or Ponzi scheme, previous investors would gain money from more people joining in and siphon their capital, a constant need for new investors/users are required to keep the scheme working.

In Axie Infinity’s scholarship case, it does not work like that.

Axie Scholarships are like property investments

To put it into perspective, launching an Axie scholarship is akin to buying investment properties. How so?

One of my favourite Axies, destroy Terminator Reptiles/Birds/Backline Aquas in 1 turn, now used by my scholar!

Axies are NFTs or non-fungible tokens, which are unique and cannot be replaced. In a sense, it is as “real” an asset to own just like property, just that NFTs are digital properties that exist on the internet.

Yes I know, difficult to wrap your head around it but you will get used to it eventually.

With this digital real estate, we then rent it out to scholars, who are essentially like tenants. Because scholars simply gets to play the game for free with no start-up cost incurred, scholarship managers like me and my girlfriend can earn a cut of their SLP since we provided the Axies for them. It is the same concept as renting your property (which you paid for) out and getting rental payments every month as passive income.

Axies essentially are yield generating NFTs which are powered by human capital, as human time and effort is traded in exchange for monetary incentives in the form of SLP payouts.

When you launch a scholarship programme, you are dishing out initial capital to purchase a pool of 0/7 breed Axies to breed and start an infinite loop, or what we call the ABC or ABCD breeding method. I won’t be going into the details of the breeding process, but you can check out the video here for more walkthrough.

Once you have started a breeding pool, you would have to dish out initial capital for 9 Axies (in my case for a Plant, Aqua, Reptile team) since each type requires at least 3 Axies to start an infinite loop.

Each time you breed, you also need to pay breeding fees in the form of 4 AXS tokens and a variable amount of SLP. The higher the breed count, the more expensive the breeding cost.

Essentially, when I first started my breeding pool and scholarship, we bulk purchased approximately 14,000 SLP from Binance and tons of AXS when it was around $11-$25 range. So do keep in mind and calculate your initial capital carefully and I suggest having an excel sheet to keep track properly.

Initial Capital

The initial capital we dished out is roughly 10K USD at that point in time to start the breeding pool and start the first 2 generations of Axies for scholars.

Going back to the property example, this is a much more capital efficient method to break even faster and also a lower barrier to entry since the initial capital is comparatively lower.

To break even eventually, we need to make sure the scholars are trustworthy individuals with knowledge, hunger to earn SLP and passion for the game, and we calculated the initial breakeven period to be between 2-3 months depending on the price of SLP then.

This is currently the 3rd week since the scholarship programme’s inception, and we now have a total of 13 scholars and 3 additional scholars from me and my girlfriend’s parents capital. So in sum, there are currently 16 scholars under our management.

Scholar Scouting and Onboarding

Axie Infinity Discord Server

We created a Discord server to manage our scholars. To scout for them, we leveraged upon Axie Infinity’s main discord server and shortlisted scholars to be interviewed.

Not all scholars are who they claim to be, so my tip here is to ask specific questions like “Name a few meta cards right now” if they claim they understand how the game works.

It is also important to make sure you adhere to the Axie Infinity’s game guidelines, so you do need to have a proper system in place.

Once you have found a favourable scholar and ready to onboard, I personally ask for a selfie with their ID card and make sure they are not under-age. I had a few instances where we were onboarding the scholars and the candidate lied that they were 18 when they were just 17 or even lower. So you do need to have proper guidelines in place to protect your scholarship programme from being banned.

I pay my scholars through Ronin wallet and they will cash out to Binance PHP based on a YouTube guide I sent them.

Scholarship Programme is pretty much being a Business Owner

As a business owner or boss, you are responsible for the well-being of your scholars, make sure they are properly incentivised, and they understand how to play the game.

I gave them a minimum daily criteria of 150 SLP which is just finishing adventure and Daily Quest, and most of my scholars are exceeding expectations and earning beyond 150 SLP per day already.

I also came up with attractive prizes for top performers so they will be motivated to work hard and earn more SLP, which is a win-win for both the scholar and the manager.

In this case, managing a scholarship programme is also like managing your own start-up, and scholars are essentially like your employees, so you got to motivate them and also instil discipline if needed.

It is human capital management in a nutshell.

Passive Income Scalability

Here is the juicy part where everyone is excited about.

Most scholarship programmes do a 40/60 split of SLP where 40% goes to the scholar and 60% goes to the manager (so does my scholarship) at the start and slowly scale up scholars payout the more they earn.

There are different ways to do this but just don’t be blinded by greed and give absurd splits like 20/80 or 10/90 which is basically slavery. They are humans too, reward them accordingly for their time and effort. Underpaying can also result in dire consequences such as quitting halfway, slacking off or lack of motivation.

Based on the current price of SLP, 13 scholars (not counting the extra 3) will generate roughly net $13,600 SGD for me and my girlfriend combined, after subtracting the payout to the scholars. In other words, we both get roughly $6800 SGD each passively each month from the current SLP price and current count of 13 scholars.

In that scenario, we will breakeven in 1-2 months if SLP prices remain stable and even if it does drop lower, we will just hold on to SLP, since we plan to be farming SLP from the scholarship programme over the long term and reinvesting it back to breed more Axies anyway.

After the breakeven stage, any amount of additional SLP earned will just be profits for me and my girlfriend.

As time goes by, we will still scale up the scholarship and hire more scholars to play the game, so we expect the passive income to scale up as we reinvest our SLP and breed more Axies to hire more scholars.

This is also not a pyramid scheme because your returns is proportionate to how much you reinvest back into it, and not us benefitting solely from new players joining the game, so skeptics, your doubts are cleared here 🙂

Time Commitment

As with any other passive income stream, starting the scholarship programme from the ground up can be extremely time consuming and daunting to say the least.

There were many excel sheets to work on and optimise, the scouting and interviewing of scholars, setting up a proper discord server, coming up with a proper payout model and tons of backend admin work.

Also, to read up more on Axie gameplay, understanding the meta, breeding the right Axies, selling the bad ones and buying quality Axies to breed, as well as shortlisting potential scholars. The list goes on and on so if you want to start a programme yourself, be sure to know what you are getting into. Things can get overwhelming easily if you are not tracking the SLP properly or if a scholar misbehaves etc.

So while the passive income stream is ultra lucrative when compared to other methods like property investing or dividend investing, there are tons of initial time and effort you need to put in to set up this passive income stream.

Also, if you don’t have foundational knowledge into crypto, blockchain or DeFi, it might be an entry barrier as well since you will need to toggle with different wallets, setting up scholar accounts and managing their payouts through the blockchain. Many factors to consider as this is a business in and of itself.

You also need to understand the game economy thoroughly and build your own community and keep your scholars motivated and happy. You got to be a leader and guide the scholars through the initial stages, so I think it is super important that you know what’s going on first before jumping into scholarships for the money.

Summary TLDR

  • Understand how Axie Infinity works and why Play-To-Earn is viable
  • Set up proper excel spreadsheets to keep track of your profit/loss/cost/Axies etc
  • Set up a breeding pool by buying at least 3 Axies of the same type for breeding infinite loops
  • Set up wallets for scholars accounts for you to transfer the Axies into the scholar account for them to access
  • Understand the guidelines, Dos and Don’ts and ban-able activity
  • Set up a discord server to scout and onboard scholars
  • Hatch the eggs and continue to breed every 5 days and onboard scholars using the same breeding method used and keep track of the Axie generations
  • Motivate your scholars and pay them consistently to keep them incentivised
  • Rinse and repeat and scale your scholarship business over time

The list above is not exhaustive as there are a lot of minor details which I am unable to fully cover in this article.

The moral of the story here is: There is no free lunch in this world.

If you want to get rewarded with the awesome passive income which is real and can be attained, you need to put down capital, time and effort with the right knowledge and understanding of this ecosystem before jumping in and launching your scholarship programme.

If you jump in without fully understanding first, a lot of things can go wrong, such as:

  • Breeding cost is more than buying from marketplace (Not profitable)
  • Your breeding Axies turn out to have bad recessive genes and have parts which are detrimental to the Axie type
  • Scholars lie to you about their age, you did not check and the game bans your entire scholarship
  • Buying the wrong Axies and scholars are unable to earn SLP because terrible Axies = terrible win rates = terrible SLP earning
  • Overpaying for Axies – Prolongs your breakeven period, or you don’t breakeven at all
  • Not having a proper spreadsheet to keep track of things
  • Not backing up you seed phrase and ends up losing your Axies and assets

As you can see here, there are many things that can go wrong. So if at this point you can’t even wrap your head around what NFT is or how to send crypto tokens from address A to address B, then this strategy is not for you.

You got to put in the effort and due diligence before diving deeply into this ecosystem.

On the other hand, if you have been doing your research about Axie Infinity and have been keen about launching a scholarship programme yourself, then I hope this article has been helpful for you.

These are first-hand experiences I encountered while launching the scholarship programme and even though I watched tons of videos on starting scholarships, breeding strategies etc, I still faced a lot of unforeseen circumstances which arises here and there. It won’t be smooth sailing at the start, but if you want to get that sweet, juicy passive income, you got to put in the effort and do your homework.

Parting Words

Axie Infinity is a blockchain-based game off Ethereum, so it is important that you understand what Ethereum is in the first place and basic things like setting up a Metamask wallet, transferring ETH from an exchange into Metamask, and purchasing Axies using ETH. I will leave a few helpful links to help you onboard faster, but do note that none of these are financial advice, and you should do your own homework if you really want to get started on this game.

If you truly want to be profitable and make extra income from it, then you will need to commit time to the game and earn your SLP to make your investments worth your while, but who knows, maybe 1 year from now, 10 million people or more will be playing this game and your Axies can easily worth 4-5 times more than when you bought it. NFT is a magical new asset class with immense potential.

Here are some links which you may find useful for your Axie Infinity journey:

Axie Infinity Whitepaper/Guide

Axie Infinity Road Map

Axie Infinity Breeding Simulator

Axie Infinity Pricing Calculator

Axie Infinity Starter Guide with Good Info

Axie Infinity Market Place

Axie Infinity Scholarship Guide (Walkthrough)

If you think all these are still too complicated, you can consider joining my telegram group where I share articles, investment opportunities and more research based content on an almost daily basis. You can also ask questions, and take part in polls to see how others think as well! 

Join My Tele Channel Here For Blog Updates And More!

For those who are already into Crypto

Want to learn how you can earn high yielding interest rates on your idle crypto assets in a secure, safe and easy manner? 

Earn Yields on Those Crypto With These Platforms

You can read up more on my post  here to learn more about Celsius and Nexo which give you interest on your crypto assets 

Or read up more on Hodlnaut here which is a Singapore-based crypto lending platform with market beating interest rates

What is Bitcoin? Answers here

Or do your due diligence on Bitcoin in my post here where I debunk some of the myths regarding Bitcoin.

What is Ethereum? Simple Guide Here

I did a bite-sized article on Ethereum for you to get a crash-course on what the buzz word is all about here.

Gemini Exchange (My Favourite Crypto Exchange)

Also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!

Too Many Crypto Platforms? Here’s a Crypto One-Stop Solution

If you think there are too many crypto platforms out there, here is a simple solution for you. An all-in-one app for you to earn yield, trade, invest or borrow crypto with high security and assurance. Check out my Matrixport review 

What is Decentralised Finance (DeFi)?

Or do you want to learn more about DeFi in a simple to understand manner? Click here to learn more

How to Value Crypto Assets?

Learn more about how you can put a “fair value” on crypto such as Bitcoin, Ethereum and more here

Crypto Referral Links (Click and Sign Up)

Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.

Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount! 

Binance Exchange: Create a Binance.com account here and trade the widest range of crypto pairings!

Hodlnaut: Earn US$20 in BTC/ETH/USDT/USDC/DAI for free with your first transfer of US$1000 or more in the corresponding crypto asset of your choice!

Celsius Network: Earn US$40 in BTC for free with your first transfer of US$400 or more in any crypto asset and wait for 1 month!

Matrixport: Get a $1288 free coupon trial to try their product and earn $20 in USDC when you sign up successfully and become a qualified client!

Nexo: Earn US$10 in BTC for free when you transfer US$100 or more in any crypto asset of your choice!

The Power of Low Fees (My US Broker!)

One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions. 

Ever since I switch to Firstrade last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far. 

Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers)

Alright that’s it! For now, think long term, tune out the noise and avoid the temptation of gambling meme stocks, think of the companies that will do well in the long run simply find bargains/dollar cost into your positions. If you need some inspiration for companies to research, you can check out my post on 5 stocks to buy if the market crashes here.

Disclaimer: 

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Stocks and Crypto Portfolio Update (July 2021)

What a month! From inflation fears to crypto market euphoria of NFT gaming led by Axie Infinity which drove the start of a new market segment called “Play-To-Earn” to the short squeeze of Bitcoin and the renewal of a crypto bull run. Couple that with overall bullish-ness of the traditional markets, we saw a rally in the month of July from the tech sell off and crypto crash just months and weeks ago.

Some Minor Updates

I haven’t been able to come up with a blog post recently because I have been busy handling my Axie Infinity Scholarships and I am happy to say that there are now 8 scholars under my wing. Not too bad for the first 2 weeks of this scholarship business.

Starting a scholarship from the ground up was definitely daunting and there were a lot of things to take note of. It is the same as starting a business or investing into a property and finding tenants; in this case, finding scholars so you can rent out your Axies and in return, you earn a cut of their earnings. The more scholars, the more scalable that passive income stream.

At current SLP price of approx $0.3/SLP, each scholar should at least generate $1000 SGD (net earnings) per month. 8 scholars would give a whopping $8000 SGD passive income per month, to me, that’s wild, and I am still going to onboard even more scholars once the Axie eggs hatch every 5 days.

If you have no idea what I am talking about here, you can read my post here to find out more yourself.

Market seemed to have bottomed in June

Stock market or crypto market, it doesn’t matter. We saw big tech names fall off the cliff after the Fed started raising ideas about closing the money printing taps at an earlier date and overall inflation fears, while on the crypto side, China’s crackdown on Bitcoin mining also saw Bitcoin and the broader crypto market sell off around the same time in June.

In particular, Bitcoin bottomed out at roughly 29K/BTC and we saw a short squeeze from the months long of accumulation by institutional investors. The supply shock from the accumulation (based on on-chain metrics) and the funding rates from Bitcoin futures were catalysed when rumours about Amazon offering crypto asset as payment method saw an immediate liquidation of short sellers (mostly retail investors) and the short squeeze followed. Bears were in disbelief while Bitcoin rapidly rose to hit the 40K USD resistance band.

US Tech stocks also rallied during this earning season which is expected, since there was a market correction in June. Now that central bank policies are more certain, investor demands for high risk asset seemed to be picking up traction.

Overall, July was a great month if you bought stocks or crypto during the market sell-off and held on to it. You would be sitting on decent profits right now.

My Current Positions

Currently, I have a total of 13 positions spread among my US stocks and crypto portfolio.

I trimmed off some crypto positions that were not meaningful to my portfolio allocation, and concentrated fire onto a few high conviction plays.

The current allocation looks like this (Bold ones are crypto and unbold ones are stocks):

RankingNamePortfolio Allocation %
1.Ethereum 24.04%
2.Square Inc13.17%
3.Axie Infinity Token12.85%
4.Etsy Inc11.93%
5.Shopify Inc11.62%
6.Coinbase Inc7.03%
7.Fantom Token6.48%
8.Fiverr5.49%
9.Roku Inc3.43%
10.Pancake Swap Token1.64%
11.Autofarm Token0.82%
12.Zilliqa0.82%
13.Band Protocol 0.68%
Portfolio Allocation (As of 29 Jul 2021)

I use StocksCafe to keep track of all my investments (include Robo) + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

Increasing Conviction in Crypto Market, Particularly NFT Gaming (Axie Infinity)

If you look at my current allocation and compare to the previous update, you will realise there is a new allocation and that is my Number 3 spot: Axie Infinity Token (AXS)

I have shared various times on my Telegram channel about the growth numbers, fundamentals and just how early this market segment is. There are 2.5 billion individuals who are unbanked and we have 1 billion gamers.

You can see what the total addressable market for this niche yourself. And it is still so early because most people don’t even realise how huge of a potential this is going to be.

The future generation, as we know it, is going to be the first generation of young adults that might grow up without a bank account. Why? Because they don’t need to. Why bother parking your money when interest rates are dirt low at 0.05% APY? If you adjust it to inflation rates, your money is rotting and compounding negatively if you left all of your cash in a bank account.

Instead, young adults in the future will hold their money in Web3 wallets such as Metamask. They can easily get 20% APY on Anchor Protocol without any KYC requirements or income assessments, simply approve the smart contract on-chain, and poof, your money is deposited into the protocol and generating yield.

Shifting towards a digital economy

The future will be digital. Like it or not, Covid-19 sped up this trend and our economy will turn digital forever. Just ask yourself, how many hours do you spend on the internet, and how many hours do you spend hanging out, physically, and not using social media.

So with this growing trend, I believe Axie Infinity to be the solution to all of these. It is the marriage between gaming and economic productivity. Gone are the days where people spend tons of money in a game only to get one thing in return: Wasted Time.

With Play-To-Earn picking up pace, people living in emerging markets will stand to benefit the most as they can earn more than their minimum wage, while first-world country individuals can bolster their income further by playing a game.

Gaming hours are now turned into productive hours with actual monetary value.

Re-Allocating Capital

Aside from increasing my position in AXS tokens, I have also pulled out from the following:

  1. Sold Teledoc (Weak Mid-Term Prospects)
  2. Consolidated my crypto positions (Concentration > Diversification)

*My Ethereum position right now is made up of a mixture of Ethereum that is being yield-farmed and stored in the form of Axies.

Aside from that, the capital from Teledoc will be converted into a stable coin before I decide on where I can allocate to next. Perhaps, simply buying ETH and AXS on pullbacks.

With the new semester coming along and my scholarship business running in full engine, I don’t think I will be able to write blog post as often anymore.

Also, as I dived deeper into the crypto rabbit hole, I realised how huge of an opportunity cost I am incurring if I continued to just allocate to stocks.

Crypto offers so many new dynamics and dimensions as to what you can do to invest, and the risk-reward (Sharpe ratio) is also marginally higher compared to what you can achieve in the stock market.

30% annualised returns in the stock market is market-crushing, but it may just be a normal number in crypto. Of course this is not always the case, so you do have to do thorough research and build conviction yourself.

Here is the breakdown of my position in a pie chart:

Yes, the big chunk right there is Ethereum. 🙂

I am happier with my allocation right now and the returns also proved why.

Stocks+ Crypto Performance (29 July 2021)

I am comparing it beside benchmark indexes like STI, Total World Stock Index and S&P 500 to show the outperformance of a portfolio if you were to allocate to crypto.

Not only do you achieve greater risk-adjusted returns, you also get more diversification since stocks and crypto are pretty uncorrelated.

The +75.33% Year-To-Date return thus far is not even including the interest yields from staking/yield farming and my SLP earnings from my Axie scholarship program, if I combine all of these together, my returns thus far would be even higher.

The strategy I adopted is pretty simple as well. Once I have built a deep enough conviction around a company or crypto project, I simply dollar-cost average either weekly or monthly, whenever I have extra spare funds.

My plan right now is to reinvest my passive income from my Axie scholarships back into the game and breed more Axies so that I can expand my scholarship further and recruit more scholars. If one scholar rakes in a net $1000 SGD passive income per month (assuming SLP is $0.3 each), having 10 or more scholars would easily be a general manager or director’s pay in the corporate world. Just that this is even better, since it is passive in nature. 😉

Crypto 47.3%, Stocks 52.7%

Like I mentioned before in my previous posts, my stocks allocation is pretty much set and I don’t think I will be initiating any sells unless circumstances change or the growth story is just not the same anymore.

My goal now is to continue DCA into my crypto position since I have higher conviction in crypto than in stocks. And my initial crypto position has already ballooned and about to flip my stocks allocation soon.

If you are bullish on crypto but not crypto-savvy, you can utilise CeFi solutions to earn passive income

For centralised crypto solutions, I am currently earning passive income on the following:

  • Hodlnaut (Earning interest on Ethereum/Bitcoin/USDT/USDC/DAI)

I am getting consistent returns every week and it is also compounding, which is a good thing as compound interest is the most powerful way to build wealth while I am literally doing nothing.

This path is more for passive investors who do not want to take on huge DeFi risks and if you are curious, I am earning my interest in ETH with my deposited ETH/BTC and stablecoins.

Points to Take Note

Investing in crypto is not all rainbows and butterflies. There are massive amounts of risk but in return the rewards are way higher than you can expect on the stock market.

There is always a give or take in investing, as nothing that offers high returns is without the risk as well.

Before you decide to jump into crypto due to FOMO and greed, here are some things to take note of.

  1. Lack of Due Diligence (Not understanding the crypto asset and blindly entering based on price and other’s opinions)
  2. Exchange Hack Risk (There are many scammers and hackers out there in the crypto space)
  3. Volatility-induced irrationality (Many new investors panic when they see huge price fluctuations resulting in panic selling behaviours)
  4. Hot Wallet/Cold Wallet (Need to understand the difference between the two as that is how you will store your crypto assets)
  5. Smart Contract Risk (This applies to those who are already in the crypto space, there may be smart contract bugs or loopholes that can drain liquidity so do take note of the project before putting your money in)

Some of these points apply to Stock market as well, and to new investors, if you are unsure whether you can stomach the volatility, you should start from the stock market first. 

If you are uncomfortable seeing your net worth drop 50% or more, you should not be in crypto.

Crypto is not for everyone

At the end of the day, your investment portfolio should reflect your own personality, that is why everyone’s portfolio is different and it is futile to copy another person’s portfolio if you don’t understand what you are doing.

Crypto can be a great place for investors who knows the risk of the asset class but appreciates the innovation and technology driving the space and understands the risk-reward ratio over the long term. 

If you are an individual who simply cannot take more than a 5% paper loss or cannot trust anything that is not MAS regulated, then please stay out of crypto at all cost. 

Risk and Return goes hand in hand. If you are not willing to take 50% or more potential drawdowns, don’t expect to see 200%, 300% or 600% upside returns on your portfolio over the long run. 

Every portfolio follows the Efficient Frontier with some being on the lower end and some being on the higher end, the trick to get market-beating returns is to be on the higher end of the spectrum consistently and effectively and understanding that asset allocation drives returns.

If you think all these are still too complicated, you can consider joining my telegram group where I share articles, investment opportunities and more research based content on an almost daily basis. You can also ask questions, and take part in polls to see how others think as well!

Join My Tele Channel Here For Blog Updates And More!

For those who are already into Crypto

Want to learn how you can earn high yielding interest rates on your idle crypto assets in a secure, safe and easy manner? 

Earn Yields on Those Crypto With These Platforms

You can read up more on my post  here to learn more about Celsius and Nexo which give you interest on your crypto assets 

Or read up more on Hodlnaut here which is a Singapore-based crypto lending platform with market beating interest rates

What is Bitcoin? Answers here

Or do your due diligence on Bitcoin in my post here where I debunk some of the myths regarding Bitcoin.

What is Ethereum? Simple Guide Here

I did a bite-sized article on Ethereum for you to get a crash-course on what the buzz word is all about here.

Gemini Exchange (My Favourite Crypto Exchange)

Also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!

Too Many Crypto Platforms? Here’s a Crypto One-Stop Solution

If you think there are too many crypto platforms out there, here is a simple solution for you. An all-in-one app for you to earn yield, trade, invest or borrow crypto with high security and assurance. Check out my Matrixport review 

What is Decentralised Finance (DeFi)?

Or do you want to learn more about DeFi in a simple to understand manner? Click here to learn more

How to Value Crypto Assets?

Learn more about how you can put a “fair value” on crypto such as Bitcoin, Ethereum and more here

Crypto Referral Links (Click and Sign Up)

Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.

Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount! 

Binance Exchange: Create a Binance.com account here and trade the widest range of crypto pairings!

Hodlnaut: Earn US$20 in BTC/ETH/USDT/USDC/DAI for free with your first transfer of US$1000 or more in the corresponding crypto asset of your choice!

Celsius Network: Earn US$40 in BTC for free with your first transfer of US$400 or more in any crypto asset and wait for 1 month!

Matrixport: Get a $1288 free coupon trial to try their product and earn $20 in USDC when you sign up successfully and become a qualified client!

Nexo: Earn US$10 in BTC for free when you transfer US$100 or more in any crypto asset of your choice!

The Power of Low Fees (My US Broker!)

One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions. 

Ever since I switch to Firstrade last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far. 

Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers)

Alright that’s it! For now, think long term, tune out the noise and avoid the temptation of gambling meme stocks, think of the companies that will do well in the long run simply find bargains/dollar cost into your positions. If you need some inspiration for companies to research, you can check out my post on 5 stocks to buy if the market crashes here.

Disclaimer: 

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Generating Profitable Passive Income While Schooling

When it comes to passive income, there are many methods which you can go about to attain it. If you do a simple search online, you can see blogs recommending you to do things such as selling stock photos, publishing an E-Book, buying dividend stocks and many more.

The key to passive income is to set them up, and once you do, you just stop managing it and it will provide for you passively, months after months after months even while you sleep.

My thoughts about passive income has also evolved throughout the years. When I first explored passive income as a 18 year-old JC student back in 2017 , I realised that in order to attain sustainable passive income, you either need to have a huge initial starting capital that can be deployed and earn a yield for you (such as dividend stocks investing) or you can hustle hard for a few months and reap the rewards later (such as stock photos or writing an E-Book).

While both methods are attainable depending on your current financial status, and it really does not matter if you are a student or working adult. The point here is: Creating multiple passive income streams is not only possible, but essential if one wants to attain financial freedom early.

For myself, I am currently getting passive income from 3 main sources which I will elaborate briefly below.

Passive Income Stream 1: Stock Photos Royalty

While I was still studying for A levels back in 2017/2018, I decided to get some passive income by uploading stock photos in a bid to boost my pocket money.

I started off with EyeEm, and started uploading photos which I have taken from my travels and photoshoots. I was really into photography during those times and even have a website and Instagram page documenting all my work and journey.

Some of the stock photos I uploaded on EyeEm

The photos took days to weeks to be uploaded completely as I have thousands of photos to be uploaded, and also to tag them correctly so that the right buyers can see them. So effort wise, it was pretty hefty and time consuming at the start.

I made a few huge sales initially, and even had massive single photo sales up to $450 USD per image.

Aside from EyeEm, I started uploading my stock photos to iStocks, Shutterstock and Getty Images. VSCO also managed to headhunt 4 of my images and bought them for roughly $500 USD each.

So the effort here is to upload the images to these sites diligently, and then reaping the rewards only months or years after the upload.

Also, not all uploaded images will have a sale. I have over 18,000+ photos uploaded in total and the initial few months saw literally $0 in sales, so you got to be patient before the passive income starts rolling in.

Overall, the stock images generated roughly $10,000 USD in total across 3 years, so it translates to roughly $556 USD in passive income per month. Not too bad for that initial effort and enjoying the fruits even years after the initial upload.

I also have paid wedding shoots and freelance work with GrabFood, FoodPanda and more, so photography really boosted my overall income when I was still schooling in JC. Even till today, I am still getting some stock photo sales every month even though it has dropped significantly since I have stopped uploading and moved on with other things instead.

Passive Income Stream 2: Crypto Yield Farming/Staking

This one is not as low barrier as my first passive income stream. This requires you to have some understanding of how crypto and blockchain works, and also a level of conviction and bullish-ness in the cryptocurrency space.

So if you don’t know what I am talking about, this income stream might not yet be suitable for you and you may want to check my other posts first.

If you are still reading this portion, I will assume you already know the basics of how crypto and blockchain work.

As most readers already know, I have recommended centralised crypto platforms such as Celsius, Nexo, Hodlnaut and Matrixport which allows crypto investors to earn interest on their idle crypto assets.

Generating Yield from your Crypto is like Dividend Yield in Traditional Finance

The idea here is, instead of letting your idle Bitcoin or Ethereum lie around while you buy and hold, you can park them in the lending platforms mentioned above and earn a yield from them. It is almost like getting a dividend yield so you get the idea.

Aside from centralised crypto platforms, I took on higher risk and went into DeFi yield farming. This is not for beginners, as it requires a deep understanding to how smart contract works, how to transfer crypto assets through different blockchains and more.

From yield farming, I can get higher APY (Annual Percentage Yield) on my crypto of up to 100% APY or more.

Staking Your Crypto Tokens to earn Yield

Aside from yield farming and parking them in lending platforms, I also have tokens which are being staked.

Staking just means you are locking up your crypto tokens onto the blockchain and as a reward for securing the blockchain, you get staking rewards in the form of interest. The APY is not as attractive as yield farming but it is a good way to earn a yield on tokens I am bullish about.

Overall, this income stream is able to generate 4-digit passive income (SGD) for me although the amount can be inconsistent every month due to price fluctuations of the underlying crypto tokens. This passive income stream is also riskier, so risk-reward ratio wise, only if you are able to withstand the price volatility, the passive income is real and waiting to be made.

Passive Income Stream 3: Axie Infinity Scholarships (In Progress)

For those who don’t know what Axie Infinity is, it is a Pokemon-inspired NFT strategy game which is built on top of Ethereum. The game is a pioneer of a new phenomenon known as “Play-To-Earn” or P2E. I wrote a post on the game before so you may want to check it out if you don’t know what is going on.

Essentially, you need 3 Axies (the in-game NFT creature) to start playing. At the point of writing, you need approximately $1200 USD to get started with a decent team of Axie.

This can seem like a hefty starting cost, but it really is not. Once you start playing, you will earn a reward token called Smooth Love Potion (SLP) which can be used either for breeding or sold off for fiat like USD. SLP is a ERC-20 token that can be traded on crypto exchanges and exchangeable for real money.

If you are able to earn at least 150 SLP per day (minimum requirement), that would be a total of 4500 SLP in a month. At current prices, that would translate to roughly $1350 USD, so you breakeven from just playing in your first month.

Of course, if you are not happy with the game, you can simply sell your Axies off and try and breakeven. But that is not the topic for today.

For me, I am currently breeding Axies together with my girlfriend. We pooled out resources together and launched a breeding farm and in about 2 days from the point of writing, we will be launching our Axie “Scholarship” programme and offering Filipinos on Discord a chance to earn an income during these difficult times.

Our goal right now is to onboard a total of 5 scholars and we are currently conducting interviews and sourcing for potential scholars for our programme. We have already onboarded 1 and are in the process of onboarding 4 more in the next few weeks.

How Scholarships Work

In simple terms, the scholar are like employees who trade their time and energy in return for monetary incentives (in this case, SLP). Scholars do not need to dish out any upfront capital to play the game and the SLP earned are profits for them to keep.

In return, scholarship managers are business owners that dish out initial capital (the 3 Axies) for scholars to start playing the game and earning SLP.

This symbiotic relationship means that both the scholar and manager are able to achieve mutual wealth creation since a portion of what the scholar earns will go to the manager, in return for the manager’s capital layout cost and soaking up the risk of Axie ownership.

Once we are able to get the right number of scholars onboard, it can hopefully create a viable and scalable income stream for my girlfriend and I. Also, scholarships are not just meant for profit generating purposes, but also providing meaning for low-income earners in the Philippines and giving back to the Axie Infinity community.

The community is filled with helpful individuals who won’t hesitate to help newbies out and there are tons of informative YouTube videos and gameplays made by fellow Axie gamers that helped me tremendously when I first started.

The spirit of giving and the amount of abundance from this community is incredible, and I am proud to be part of the community and also launching a Scholarship programme.

If we eventually can onboard 10 scholars or more as we scale, our passive income stream will shoot through the roof. You can do the math and see what I mean 😉.

Conclusion

Passive income is extremely powerful, but an underrated way to achieve financial freedom since most folks are too busy with their lives and can’t be bothered to explore new options.

Most media outlets, financial blogs and educational platforms are lacking behind in terms of innovating new methods of passive income generation, and I hope my post today broadened your perspectives as to what you can do in the world of crypto and use creative methods to achieve sustainable passive income.

You don’t need to own dividend stocks, REITs, endowments or bonds or spamming your spare cash into CPF for the 4% (only to enjoy it when you are old), because there are more ways to achieve passive income with lesser capital, more flexibility and higher scalability.

While I am not bashing traditional methods of passive income generation, but merely stating alternative passive income methods based on my own convictions and beliefs.

So at the end of the day, if you do not believe in the potential of blockchain technology or crypto in general, the passive income stream that I am utilising may not be suitable for you.

Please take my article with a pinch of salt, as I am after all just a guy on the Internet sharing my thoughts and strategies I personally use to generate passive income.

Everyone’s path is different. We all have different circle of competence and risk tolerance levels.

But I still hope that my post was able to shed some light into how you can create passive income streams from nothing and bolster you current active income stream further.

Finding meaning from your passive income

Like Warren Buffett said, “If you can’t find a way to make money while you sleep, you will work until you die.”

Nobody could have said it better. Active income is what keeps you in the rat race. Passive income is what keeps you free.

Passive Income is earned even while you are sleeping

Financial Freedom is achieved when your passive income is more than your monthly expenses. When that happens, it means you no longer need to depend on your active income (or salary) to survive.

What this means is, you are no longer shackled by living pay check after pay check, and you will have more freedom and time to explore the things you truly love, or even start your own business without fear. That to me, is magical and I want to experience that one day, hopefully in my 40s or even 30s.

For now, I will continue to build up my passive income streams and maximise them by reinvesting them for the future. Who knows? I might retire earlier or later than my target age, but that’s what makes the future so exciting right?

What other passive income streams do you have that is supplementing your active income? Let me know in the comments below!

Join My Tele Channel Here For Blog Updates And More!

I use StocksCafe to keep track of all my investments + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

For those who are already into Crypto

Want to learn how you can earn high yielding interest rates on your idle crypto assets in a secure, safe and easy manner? 

Earn Yields on Those Crypto With These Platforms

You can read up more on my post  here to learn more about Celsius and Nexo which give you interest on your crypto assets 

Or read up more on Hodlnaut here which is a Singapore-based crypto lending platform with market beating interest rates

What is Bitcoin? Answers here

Or do your due diligence on Bitcoin in my post here where I debunk some of the myths regarding Bitcoin.

Gemini Exchange (My Favourite Crypto Exchange)

Also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!

Too Many Crypto Platforms? Here’s a Crypto One-Stop Solution

If you think there are too many crypto platforms out there, here is a simple solution for you. An all-in-one app for you to earn yield, trade, invest or borrow crypto with high security and assurance. Check out my Matrixport review 

What is Decentralised Finance (DeFi)?

Or do you want to learn more about DeFi in a simple to understand manner? Click here to learn more

How to Value Crypto Assets?

Learn more about how you can put a “fair value” on crypto such as Bitcoin, Ethereum and more here

Crypto Referral Links (Click and Sign Up)

Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.

Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount! 

Binance Exchange: Create a Binance.com account here and trade the widest range of crypto pairings!

Hodlnaut: Earn US$20 in BTC/ETH/USDT/USDC/DAI for free with your first transfer of US$1000 or more in the corresponding crypto asset of your choice!

Celsius Network: Earn US$40 in BTC for free with your first transfer of US$400 or more in any crypto asset and wait for 1 month!

Matrixport: Get a $1288 free coupon trial to try their product and earn $20 in USDC when you sign up successfully and become a qualified client!

Nexo: Earn US$10 in BTC for free when you transfer US$100 or more in any crypto asset of your choice!

The Power of Low Fees (My US Broker!)

One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions. 

Ever since I switch to Firstrade last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far. 

Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers)

Alright that’s it! For now, think long term, tune out the noise and avoid the temptation of gambling meme stocks, think of the companies that will do well in the long run simply find bargains/dollar cost into your positions. If you need some inspiration for companies to research, you can check out my post on 5 stocks to buy if the market crashes here.

Disclaimer: 

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Axie Infinity: A Review and How to Earn Free Crypto By Playing a Game

This is the latest craze in the crypto space after a video documentary showed how people living in the rural areas of the Philippines were able to make ends meet by playing a blockchain-based video game called Axie Infinity.

The game’s idea and inspiration was taken from Pokemon and  you can battle, collect, raise, and breed Axies. That is important to what Axie is, but the ecosystem is way more complicated than how simplistic it all sounds.

Image for post

Behind the game itself, it is powered by the Ethereum blockchain, meaning it is open-source, and any player from any part of the world will be able to participate.

As long as you have a wallet that can hold ETH and buy/sell Axies or crypto tokens, you can access the game wherever you are.

Normal gaming companies want you to pay 60 bucks for a game and spend countless hours and days on it for fun, with no financial reward. But what if a game paid you 60 dollars per day to play it. The thought of that alone is crazy.

A game paying you to play? Yeah, it is and it is Axie Infinity’s vision and mission to make that happen. We have already seen it happen with players in the Philippines making cents (SLP) when playing Axie Infinity. Play to earn is here. The entire gaming economy will change and we are already experiencing this shifting paradigm.

The Basics

In this game, you basically have the following:

  1. Axies
  2. Small Love Potion (SLP)
  3. Axie Types
  4. Breeding
  5. Axie Infinity Shard (AXS)
  6. Land

I won’t dive into the details of each as that can be an entire topic of its own. But in essence, Axies are NFT monsters which are each unique and different from one another. They have different genes (Dominant/Recessive) which are huge consideration for breeding but to get started in the game, you will need a minimum of 3 Axies.

My Starter Axies (2 Plant + 2 Aqua)
  1. I personally started with 3 Axies and it cost me roughly 0.5 ETH (1.2K USD) at the point of writing. You will have to go Youtube and do your due diligence on how to select the right Axies and how to build a starter team.

2. Small Love Potion or SLP for short, is the reward you earn when you play the game. It can be sold off for fiat and right now the 2 places to buy/sell them are Binance.com or Uniswap, which is a decentralised exchange on Ethereum.

But if you are into the business of breeding Axies, you need SLP to breed new Axies.

3. Axie Types

There are 6 (Main) different classes of Axies:

  • Beast (Orange)
  • Plant (Green)
  • Aquatic (Blue)
  • Reptile (Purple)
  • Bird (Pink)
  • Bug (Red)

Each of these classes has a specific ability tendency that they are best known for. Beasts and Bugs have higher morale, which means higher chance of critical hits in battle. Birds and Aquatics have higher speed, which means they attack first/faster. Plants and Reptiles have higher health (HP), which means more damage can be taken.

This does not mean they do not get the other traits, these are just the abilities that they are known for. The more of the class traits an Axie has, the more of that ability they have.

Body Parts

Each Axie has 6 different parts/traits. From top to bottom, they are: eyes, ears, mouth, horn, back, and tail. In battle, only the bottom 4 traits are used (mouth, horn, back, and tail). There will be future use cases for the mouth and ears, as of right now they are just for aesthetic purposes.

Purity

What does purity mean? Purity is the number of traits that matches the class of the Axie. For example, a plant with 6/6 plant traits is considered a ‘pure’ plant Axie.

4. Breeding

In Axie Infinity, Axie has 2 different lifecycles: Egg and Adult.

It takes 5 days for an egg to morph into an Adult.

Once the it grows into an Adult (also requires transaction), that is when you can battle and breed with your Axie, and continue that loop forever.

In an Axie’s lifetime, it is only ever able to breed 7 times, each time requiring more and more SLP to breed.

It is recommended to breed an Axie up to 4/7 times and maybe sell off the original Axie adult and use the 4 other virgin Axies and continue your breeding pool. Depending on how much SLP you earn, you can recoup your initial cost in approximately 2-4 months and from then on it will be profit, profit and more profits.

The analogy is the same as owning an investment property, once you pay off the initial mortgage, and you rent it out, those will be your passive income and your property turns into a money generator.

5. Axie Infinity Shard (AXS)

Axie Infinity Shards (AXS) are an ERC-20 governance token for the Axie Universe. AXS holders will be able to claim rewards if they stake their tokens, play the game, and participate in key governance votes.

Players will also be able to earn AXS when they play various games within the Axie Infinity Universe and through user-generated content initiatives, but these are currently not available yet.

With AXS tokens, you will be able to claim rewards if you stake your tokens. For those that are not blockchain native and are not familiar with this concept, as an owner of AXS, you can lock your tokens (taking them out of circulation) by staking them through Axie Infinity. As a reward for this, you will earn both AXS and ETH and/or stablecoins. How? See the Delphi Digital Staking Report:

As a staker, you will receive AXS through staking yield and ETH/stablecoins from the treasury yield. Staking yield comes from the designed staking issuance.

Treasury yield comes from the treasury funds, which consists of fees derived from the Axie Infinity marketplace (breeding/buying/selling).

This is why it could be either ETH or Stablecoins, whichever currency is used in the marketplace transaction and accumulated in the treasury.

There are a total of 78,300,000 AXS tokens that are allocated for Staking issuance that are unlocked over 5.5 years.

In the first year, Delphi reports that the annual total yield, staking plus treasury, will be about 41.5% APY. That is not the crazy 100+% DeFi yield that we have been seeing recently, but it is still very decent returns. 

AXS went to the literal moon!

There are more insane reason as to why AXS is going to be so huge and why we saw the price of the token flying to the Moon and beyond, growing almost 200% in a matter of days.

Even with the meteoric rise of the token price, it is still extremely undervalued given that it is the fastest growing ecosystem with the most number of new users, real world adoption of blockchain technology, fastest growing gaming community (Twitch/Discord), highest revenue in the crypto space (more than Aave/Curve/Maker combined)

6. Land

Now land gets more complicated. As of now, land gameplay is still in development and all land are sold out. It is digital real estate and players basically buy NFTs called land where they can build literally anything and turn it into a new ecosystem of its own.

This is the concept of Co-Creation.

Essentially, this means that the possibility is endless as players are in charge of the games future. It is a player-led movement and beyond what game developers can control, and this entire new economy will form the Axie Metaverse and I believe that is one of the largest technological advancements in our time.

It is literally ‘Ready Player One’ if you watched that movie.

I won’t go into the details but as of now, players who own land will get airdrop rewards when it launches and have real estate rights on their land.

Game Play

The game play portion consist of two main components right now:

  1. PvE (Adventure Mode)
  2. PvP (Arena)

In PvE (Player vs Environment), players earn EXP (Experience Points) for battling monsters known as Chimeras. When you win, you will earn EXP points but you expense your energy.

This is the recommended route if it is your first 2-3 weeks of playing as levelling up your Axies as soon as possible is incredibly important so you can scale up your SLP (crypto that can be sold) gains.

In PvP (Player vs Player), players fight against other players in an Arena. The winning side will be rewarded with SLP and the higher your rank/Elo, the more SLP you gain.

However, do note that your opponent gets harder over time the higher you climb, so if your win rate is less than 50%, it is recommended that you farm SLP from Adventure first.

Image for post
Axie Battles V2

As you can see above, the basics are simple, you have 3 Axies (so does your opponent)

The goal is to defeat the opponent and you need the right strategies to do so. Each Axie class has strengths and weakness against the opponent and the meta will also be ever-changing.

If you played strategy based games like Hearthstone or Chess before, transitioning to Axie Infinity should be a breeze once you get the hang of how the cards work and the different abilities of each Axie.

Earning Potential

So this is the part everyone is excited about. How much can you exactly earn from playing this game? Well, it depends.

There are many different ways to earn. That depends on the kind of player you choose to be and your strategy to maximise it.

In Axie Infinity, you can choose from 3 roles:

  1. Farmer
  2. Breeder
  3. Collector

Farmer

The farmer role is obvious, it basically involves playing the game, and earning SLP. The more SLP you farm, the more fiat you can get when you trade them.

The end goal of a farmer is to maximise his returns by spending the least amount of time playing the game, so you are basically trading your time and effort for some monetary gains, which is the same concept as being an employee.

You are capped at 20 energy per day if you own less than 10 Axies, meaning you have 20 games worth each day that can generate you SLP from the game. If you lose, you don’t get any SLP. Energy replenishes every 6 hours for players with less than 10 Axies.

You also get to earn a maximum of 100 SLP from playing Adventure and 50 SLP from completing the daily quest, which is to log in to the game, play 10 adventure games and win 5 arena matches.

Assuming you manage to win at least 50% of your matches, complete the daily quest and max out your 100 SLP from adventure per day, your SLP earning potential from 1 day is approximately 200+ SLP.

Even if you didn’t manage to win games in arena, as long as you are able to max out your farm from adventure and completing the daily quests, you are guranteed 150 SLP at least per day.

Playing time wise, if you spend around 2-3 hours to complete the task and fulfil the 100 SLP from adventure, it is very doable.

With 200 SLP earned per day, that would translate to approximately 6000 SLP per month. Assuming the price of SLP as $0.2 USD at the point of writing, that would translate to a nice $1200 USD if you sell the SLP off.

It’s a decent way to earn some extra income if you ask me.

Breeder

Now this is where it gets more exciting/complicated depending on how you view it.

As a breeder, you main goal is not to farm SLP but instead, to find the pure breeds with 0/7 breeding on the market place and aim to breed out Axies that are powerful and pure that will attract buyers from the marketplace.

The earning potential will be many times more than what a farmer can earn, as by being a breeder, you are an investor and a business owner yourself.

As a breeder, you will need to dish out a hefty starting capital to fund for your initial breeding pool. To get started, you need a minimum of 4 (preferably) pure bred Axies from the same class, which can easily cost up to 1 ETH-2 ETH. For the sake of this example, we will use a Plant Axie.

A plant Axie is important because almost every starter team requires Plant as a tank. This is why Plants will always be in demand and it is a good way for breeders to make consistent income from selling new Axies on the marketplace.

As a rule, the game prevents incest so you are unable to breed a 0/7 Axie with their parents/grandparents.

With the initial 4 Plant Axies, what you need to do is to breed the 2 separate pairs and have 4 more newborns. Once your initial 4 Axies reach 4/7 breed, it is recommended to sell them off, or you can use it to battle/provide scholarships.

With the 4 newborns, you simply let them inter-breed and the cycle repeats. The best case scenario is to breed perfect genes with strong parts that are high in demand, and hopefully flip your cost basis and profit infinitely.

Scholarships

Breeding aside, some breeders also launch scholarship programmes for people who don’t have the starting capital to play the game but wishes to earn extra income anyway. Scholarship managers will be breeders who have excessive Axies that are no longer needed for breeding and can be used to battle and earn more SLP.

Scholarships usually have a set guideline of a 50/50 split where 50% goes to the scholar while 50% goes to the manager. If a scholar does well, he can even be promoted and earn 60% while the manager earns 40% and so on, but that is based on what was initially agreed on.

In essence, scholarship managers can launch a business from launching scholarship programmes and scale up the business if they are able to recruit more scholars to play the game, which increases their earning potential since the same amount of time is used but generating more SLP.

There are more details into these but to keep it short I will just end it off here.

Collectors

I don’t think anyone has the capacity to be a collector and if you are then you shouldn’t be reading my blog. This post is for beginners and starters into the game.

Anyway, collectors are high net worth individuals who collect unique Axies which cost hundred of thousands of dollars to millions of dollars on these digital NFTs.

They seek out the most unique and rare Axies, typically with mixed parts that are unsuitable for battle or breeding, but the novelty and scarce factor is what keeps their price tags high. They typically collect rare Axies known as Mystic Axies.

These Axies have body parts that are unique from the normal Axies and have a limited supply. Mystic Axies can easily cost 100 ETH or more depending on how they look and how rare their part is. You get the idea.

Collectors hold on to the NFT in hopes that one day the game will reach critical mass adoption and eventually they can sell off the NFT at a price much higher than they bought it for. Pretty much like CryptoPunks.

Conclusion

There are so much more details which I never covered in the post, and I leave you to explore the game further to do your own research and due diligence as to whether you want to commit to the game and buy 3 Axies where the cost can be pretty significant.

It is important that you understand what you are getting into and to understand the underlying technology before diving too deep.

Axie Infinity is a blockchain-based game off Ethereum, so it is important that you understand what Ethereum is in the first place and basic things like setting up a Metamask wallet, transferring ETH from an exchange into Metamask, and purchasing Axies using ETH. I will leave a few helpful links to help you onboard faster, but do note that none of these are financial advice, and you should do your own homework if you really want to get started on this game.

If you truly want to be profitable and make extra income from it, then you will need to commit time to the game and earn your SLP to make your investments worth your while, but who knows, maybe 1 year from now, 10 million people or more will be playing this game and your Axies can easily worth 4-5 times more than when you bought it. NFT is a magical new asset class with immense potential.

Here are some links which you may find useful for your Axie Infinity journey:

Axie Infinity Whitepaper/Guide

Axie Infinity Road Map

Axie Infinity Breeding Simulator

Axie Infinity Pricing Calculator

Axie Infinity Starter Guide with Good Info

Axie Infinity Market Place

Join My Tele Channel Here For Updates!

For those who are already into Crypto

Want to learn how you can earn high yielding interest rates on your idle crypto assets in a secure, safe and easy manner? 

Earn Yields on Those Crypto With These Platforms

You can read up more on my post  here to learn more about Celsius and Nexo which give you interest on your crypto assets 

Or read up more on Hodlnaut here which is a Singapore-based crypto lending platform with market beating interest rates

What is Bitcoin? Answers here

Or do your due diligence on Bitcoin in my post here where I debunk some of the myths regarding Bitcoin.

Gemini Exchange (My Favourite Crypto Exchange)

Also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!

Too Many Crypto Platforms? Here’s a Crypto One-Stop Solution

If you think there are too many crypto platforms out there, here is a simple solution for you. An all-in-one app for you to earn yield, trade, invest or borrow crypto with high security and assurance. Check out my Matrixport review 

What is Decentralised Finance (DeFi)?

Or do you want to learn more about DeFi in a simple to understand manner? Click here to learn more

How to Value Crypto Assets?

Learn more about how you can put a “fair value” on crypto such as Bitcoin, Ethereum and more here

Crypto Referral Links (Click and Sign Up)

Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.

Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount! 

Binance Exchange: Create a Binance.com account here and trade the widest range of crypto pairings!

Hodlnaut: Earn US$20 in BTC/ETH/USDT/USDC/DAI for free with your first transfer of US$1000 or more in the corresponding crypto asset of your choice!

Celsius Network: Earn US$40 in BTC for free with your first transfer of US$400 or more in any crypto asset and wait for 1 month!

Matrixport: Get a $1288 free coupon trial to try their product and earn $20 in USDC when you sign up successfully and become a qualified client!

Nexo: Earn US$10 in BTC for free when you transfer US$100 or more in any crypto asset of your choice!

The Power of Low Fees (My US Broker!)

One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions. 

Ever since I switch to Firstrade last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far. 

Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers)

Alright that’s it! For now, think long term, tune out the noise and avoid the temptation of gambling meme stocks, think of the companies that will do well in the long run simply find bargains/dollar cost into your positions. If you need some inspiration for companies to research, you can check out my post on 5 stocks to buy if the market crashes here.

Disclaimer: 

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor.

Why I Sold Alibaba

What a year! Today marks the the One Year Anniversary to the creation of this blog, and how far have we come.

A lot has changed to my investing strategy, mindset and skillsets that I acquired the past year.

And to all readers who joined the investing journey with me, I want to say a huge thank you for all the support and for reading my blog posts over the past year despite your busy schedules, because the views give me immense satisfaction and I am heartened to be able to deliver additional value and insights to knowledge-hungry individuals like you and hope to continue doing so.

Join My Tele Channel Here For Updates!

Today’s focus is on the decision that will sound crazy to me if you were to tell me this 1 year ago, and that is: Selling my Alibaba Stock.

Selling Alibaba was a tough decision given that I am very bullish about the future prospects and capital gains potential of the business in the long run.

It used to be one of my top positions and I even averaged down even when everyone were afraid of what’s happening to Alibaba when China regulators decided to crack down on Ant Group and a slew of bad news lingered around this massive growth giant.

So why did I sell Alibaba?

Opportunity Cost

The fundamental reason I sold it was due to opportunity cost.

What opportunity cost? To put it simply, my portfolio of stocks and crypto right now are growth-oriented, and after giving some time to think about how I want to allocate my portfolio, I decided that to attain the highest alpha in the long run, I have to compensate and withstand higher volatility in return.

Alibaba is a mega-cap company with a market cap of $590 Billion as of 5th July 2021.

Market Cap is a factor to determine potential upside over the long run

When we look at stocks (or even crypto), it is important to not give too much attention to the current price of the asset.

Ironically, price is the one thing that most beginners and speculators pay the most attention to, and without any sound analysis or due diligence, most people just conclude whether the stock is “cheap” or “expensive” simply by comparing it to the 52-Week price range.

Guilty of doing this eh? Don’t worry, I was once that fella who did that too.

The important thing to note here is to keep reminding yourself that price alone tells you nothing about a stock. It is very easy to forget that stocks are businesses and owning a stock of a company is to become a shareholder of the business no matter how little shares you own.

Alibaba is a mature business

Going back to Alibaba, so the reason it didn’t fit my criteria anymore was because:

Alibaba is already an established, mature and already in its late stage growth cycle.

The stock price has already priced in the growth of the company since IPO, and expecting Alibaba to become a 10-bagger is basically close to impossible. For Alibaba to 10X from current prices, Alibaba would essentially become a $5.9 Trillion company! Just the thought of it alone is insane.

Majority of my growth stocks right now are Mid-Cap companies with a market cap of around $100 billion or less.

Stocks in this category of market cap in my portfolio (at the point of writing) are:

  1. Square Inc – $109 Billion Market Cap
  2. Coinbase – $50.2 Billion Market Cap
  3. Teledoc – $25.4 Billion Market Cap
  4. Etsy – $25.1 Billion Market Cap
  5. Fiverr – $8.64 Billion Market Cap
  6. Roku Inc – $56.9 Billion Market Cap

7. *Shopify Inc – $182 Billion Market Cap

As you can see here, majority of my stocks position right now have a market cap of $100 billion or less, what this means is, if the companies were to grow bigger and become a $200 billion or even a $500+ billion business like Alibaba, their share price would follow suit over the long run.

This can be an important metric to keep in mind the next time you want to consider whether the stock you picked has the potential to become a “Five-Bagger” (5X) or a “Ten-Bagger” (10X) based on its current market cap.

A smaller market cap means that the companies are generally still in their early stage growth phase, and hence, have a huge room for growth, and potentially market beating returns over the long run. However, do take note that smaller cap stocks tend to underperform the market during bear markets and market corrections, and not all small cap stocks will eventually become large cap stocks as well.

This brings me to the next part of the equation:

Total Addressable Market

What is total addressable market? In short, it is the market sizing or how much “treasure chest” there is for companies to tap into, and hence, if they were able to get a significant chunk of the pie, they might potentially make big money and reward their investors with handsome returns in the form of share price appreciation.

Alibaba, in this case, operates mainly in the E-commerce market. The E-commerce market is filled with competition from all fronts, such as Amazon, Mercado Libre, Shopee, Coupang and many more.

The E-commerce market really started booming when Amazon started taking over the market by storm, and slowly followed by Alibaba in China with the TaoBao craze back in the 2010s.

Today, the market share of the E-commerce market is owned significantly by key market players with incumbents like Amazon and Alibaba. While I am not saying that E-commerce has already reached its peak (it certainly has not), what I am trying to put across here is that Alibaba has already experienced its ‘growth-spurt’ phase in the 2010s and has managed to consolidate their market share and attaining an immense market cap of $590 billion at the point of writing.

While Alibaba is still a blue-chip and can continuously grow at a CAGR of 20% or higher and generate impressive returns over the long run, it doesn’t quite make the cut for me as I am even more aggressive in my stocks allocation.

With share prices of Coinbase irrationally beaten down in June due to the fear and uncertainty in the crypto markets, I decided to rotate my Alibaba capital into Coinbase because crypto is still such a young, nascent industry and the total addressable market potential is monstrous.

The crypto market has a total addressable market in the trillions of dollars and it might be even more if more sectors gets disrupted or developers discover new use cases or technology.

Why Coinbase? Why not just buy Bitcoin directly?

The reason why I chose to allocate to Coinbase is because it is an investment allocation to the entire crypto space.

When crypto eventually becomes mainstream and we see billions of new users of blockchain technology, Coinbase will be the company to benefit from all the growth and adoption that is bound to happen in the future.

Buying Coinbase is almost equivalent to owning the S&P 500 ETF of the crypto space because they have support for hundreds of crypto tokens and they offer a multitude of crypto financial services beyond the scope of just being an exchange.

In short, Coinbase is a network-effect business and a software/technology company. It is very much like Apple or Google or Facebook, and I believe the next FAANG stock will have Coinbase in the mix.

While Coinbase is not the largest crypto exchange (that’s Binance), Coinbase still has a significant market share in the crypto markets and a dominant player in the United States.

Not only is Coinbase a founder-led company, the business is literally selling below its direct offering price of $250/share. That sparked my attention and I gave it a good due diligence and research into the company before I eventually decided to allocate greater into it.

Like Peter Lynch mentioned in his book “Beating the Street”, every time a stock gets irrationally sold off due to fear and fund managers are dumping them, it is the perfect time to swoop in and pick up those bargains.

That is what I did for Coinbase when it was on sale in the market for less than $220/share back in June.

At a market cap of $50 billion at the point of writing, it was an absolute steal and I am sure it will end up as one of the Multi-Baggers (3X/5X/10X) in my portfolio over the long run.

Conclusion

Alibaba is still an impressive company nonetheless and a popular stock among top fund managers and included in almost every fund that is outperforming the market right now.

While the potential for growth might be impressive over the long run, given the market cap of Alibaba and the business cycle that Alibaba is in right now, I had to trim it off my portfolio in exchange for a faster, smaller and more agile company in a growing and exponential market and that is Coinbase.

When majority of crypto prices were down 50% or more, Coinbase likewise saw a similar drawdown given its association with the crypto market. There is literally nothing wrong with the company at all: Fundamentals are the same, company is still expanding, forging more partnerships, developing more products, generating more revenue and acquiring more market share.

That was when I saw the perfect opportunity to average down my average cost and having a bigger allocation into the stock.

There was no reason not to buy in given that the direct offering of the share price went at $250/share, and being able to get in at a cheaper share price than the private investors is a huge win for retail and setting myself up for success over the long run.

My convictions in the stock is not only due to my own research and analysis in the company itself, but also my overall conviction of the entire crypto space.

I am extremely bullish about the future of blockchain technology and the life-changing potential we will be able to experience and real-world use cases such as supply chain, healthcare, financial services and even providing a livelihood for emerging economies through a new phenomenon known as Play-To-Earn.

Axie Infinity – A game which allow players to earn an income while playing

If you are in my Telegram Channel, you would have heard me mentioning a crypto-based game called Axie Infinity, which essentially is a combination of Hearthstone (Card-Game) and Pokemon. The monsters, or Axies are each NFTs and are unique. Owning the Axies would mean full ownership over it as you are the sole owner of the NFT and this can be seen on the blockchain.

Players can battle and win rewards in SLP (Small Love Potion), which is an ERC-20 token based on the Ethereum Blockchain and can be sold for cash. This seemed impossible to happen but with crypto and blockchain, anything can happen! And that is why I am so intrigued by this new technology, because the possibilities are literally endless.

I will be covering this game in more details in the near future as well, and guide you through if you wish to get started as I am already playing the game myself. Please stay tuned.

Do you share the same sentiments as me? Am I being too unreasonable or expecting too much from my investment? Am I too greedy for aiming for a 5X or 10X in the long run than a steady and established business? Leave your thoughts and comments below!

For those who are already into Crypto

Want to learn how you can earn high yielding interest rates on your idle crypto assets in a secure, safe and easy manner? 

Earn Yields on Those Crypto With These Platforms

You can read up more on my post  here to learn more about Celsius and Nexo which give you interest on your crypto assets 

Or read up more on Hodlnaut here which is a Singapore-based crypto lending platform with market beating interest rates

What is Bitcoin? Answers here

Or do your due diligence on Bitcoin in my post here where I debunk some of the myths regarding Bitcoin.

Gemini Exchange (My Favourite Crypto Exchange)

Also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!

Too Many Crypto Platforms? Here’s a Crypto One-Stop Solution

If you think there are too many crypto platforms out there, here is a simple solution for you. An all-in-one app for you to earn yield, trade, invest or borrow crypto with high security and assurance. Check out my Matrixport review 

What is Decentralised Finance (DeFi)?

Or do you want to learn more about DeFi in a simple to understand manner? Click here to learn more

How to Value Crypto Assets?

Learn more about how you can put a “fair value” on crypto such as Bitcoin, Ethereum and more here

Crypto Referral Links (Click and Sign Up)

Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.

Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount! 

Binance Exchange: Create a Binance.com account here and trade the widest range of crypto pairings!

Hodlnaut: Earn US$20 in BTC/ETH/USDT/USDC/DAI for free with your first transfer of US$1000 or more in the corresponding crypto asset of your choice!

Celsius Network: Earn US$40 in BTC for free with your first transfer of US$400 or more in any crypto asset and wait for 1 month!

Matrixport: Get a $1288 free coupon trial to try their product and earn $20 in USDC when you sign up successfully and become a qualified client!

Nexo: Earn US$10 in BTC for free when you transfer US$100 or more in any crypto asset of your choice!

The Power of Low Fees (My US Broker!)

One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions. 

Ever since I switch to Firstrade last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far. 

Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers and Robo)

Alright that’s it! For now, think long term, tune out the noise and avoid the temptation of gambling meme stocks, think of the companies that will do well in the long run simply find bargains/dollar cost into your positions. If you need some inspiration for companies to research, you can check out my post on 5 stocks to buy if the market crashes here.

Disclaimer: 

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor.

Byte-Sized Crypto Series: Ethereum 101

Today will be the start of a new, more bite-sized, quick fire analysis on individual crypto tokens. The point of this series is to summarise the overall thesis of a crypto asset and to provide an overview of what the project does.

For the first of this series, we will take a look at the world’s Second Largest Cryptocurrency by Market Cap, and that is none other than Ethereum.

Introduction

Ethereum was co-founded by a Russian-Canadian programmer Vitalik Buterin, or vb in short if you view his blockchain wallet address.

Ethereum is a layer-1 blockchain that currently operates on the Proof-Of-Work consensus, same as Bitcoin. What this essentially means is that the transactions are settled by miners and we pay “gas” or Gwei to them for helping us settle the transaction. The key difference between Bitcoin and Ethereum is the creation of “Smart Contracts” on Ethereum, which brings about a whole new use case and utility for Ether (ETH), the native currency for the Ethereum network.

Total Value Locked – A metric to gauge the popularity and liquidity depth of a blockchain ecosystem (As of 30 June 2021)

Ethereum is a giant ecosystem that is ever-growing where decentralised applications (Dapps) thrive. It is currently the largest ecosystem for Decentralised Finance with the deepest liquidity and the largest Dapps that include famous protocols like Uniswap, Yearn.Finance, Curve and many more.

You also have ERC-20 tokens which are Ethereum-based tokens that exist on the Ethereum blockchain and these include tokens like USDT/USDC/UNI and thousand other tokens and you also have NFT or Non-Fungible Tokens. NFTs are ERC-721 tokens which are, like the name suggest, not fungible.

NFT Quick Intro

In simple terms, non-fungible just means that there are no way there is an exact same design or standard of a specific NFT, which means each NFT is unique and not interchangeable. So things like Birth Certificates, NRIC, Passports, Artworks, Music, Concert Tickets or Driver Licenses can all be turned into an NFT and become immune to copyright/counterfeits. The uniqueness of NFT also makes them highly scarce, which gives them a high price tag and why we saw sky high valuation for some NFTs.

Ethereum’s Current Problems

However, due to the many flaws, scalability issues and congestion that is going on with Ethereum right now, the Ethereum blockchain currently has a high barrier to entry for retail investors due to the expensive gas fees to use the blockchain to access decentralised applications like Aave, Curve, Maker or Compound for example.

This is also why we saw alternative blockchains like Binance Smart Chain, Polygon, Fantom, Solana, Avalanche, Harmony etc. gaining traction due to their cheaper gas fees, faster transactions and overall ease of use while Ethereum transits to a new self.

Enter Ethereum 2.0

Ethereum 2.0 is basically an improvement upgrade for Ethereum to enhance the scalability of the network. And this would be done through a carefully planned roadmap by the Ethereum Foundation.

Eth 2.0 is also code named “Serenity”, which includes the implementation of several enhancements, speed, efficiency, and scalability that should be improved without sacrificing security and decentralisation.

1. Proof of Work –> Proof Of Stake

The very first and most prominent upgrade would be to transfer Ethereum from Proof-Of-Work (POW) into Proof-Of-Stake (POS) consensus mechanism. Doing so will give Ethereum immense amount of scalability.

POS replaces the computing power used in POW by requiring validators to have ‘skin in the game’ through staking. In simpler terms, by staking a minimum of 32 ETH, you can become an Ethereum 2.0 validator and become paid for confirming transactions just like miners did in POW.

2. Sharding (Divide and Conquer)

To access the Ethereum network, individuals need to do so via a node, which is basically a computer. Nodes are required to store a copy of the entire network (since the beginning), which drastically slows the network down as the network becomes more popular and demand goes up. To solve this, Ethereum 2.0 will introduce the concept of sharding, which is basically a divide and conquer strategy.

Shard chains are just like any other blockchain, but they only contain specific subsets of one whole blockchain. This allow nodes (computers) to only deal with one slice (or shard) of the Ethereum network, and thus increase the transaction speed and overall capacity of the Ethereum blockchain.

Visualising how sharding will be like

To put it into perspective, just think of the original Ethereum as a restaurant facing a long queue with only 1 cashier counter. Through the implementation of sharding, you essentially divide the same queue into 10 cashiers and speed up the clearing of orders. This will speed up the network tremendously.

3. The Beacon Chain (Already Live)

Since the shard chains will be working in parallel to the main Ethereum network, there needs to be something that keeps everything in-sync. The beacon chain basically ensures this by providing consensus to all shard chains that are working in parallel.

The beacon chain will be the first implementation of Ethereum 2.0 (implemented successfully!) as the coordination layer of the new network, and once the entire Eth 2.0 is implemented, the Beacon Chain will finalise the data of 64 shards.

What’s Next?

Now that you understand the basics of what Ethereum is and the key updates of Eth 2.0, why is Ethereum so popular and so highly anticipated among the investment space?

This is due to one of the most exciting upgrades to Ethereum, and that is EIP-1559. (Ethereum Improvement Proposal-1559)

EIP-1559 is basically a proposal (already approved and waiting to be deployed) that will transform Ethereum into a deflationary token. Each time a transaction on Ethereum occurs, a portion of ETH will be burned out of circulation forever. Gas fees will also not fluctuate like before which makes transaction fees more predictable. All of these are implemented to eventually transit Ethereum into a Proof-Of-Stake blockchain through the merger of Eth 1.0 and Eth 2.0.

The more the Ethereum network is used, the more ETH is burned. Getting the catch yet? This is going to be crazy! Because the more the supply is burned, the higher the price of Ethereum is going to be. And demand going up will lead to more burning and hence even lesser supply. Simple economics here.

EIP-1559 is set to be live in July 2021. Which is literally soon at the time of writing. (The testnet for EIP-1559 is already live!)

EIP-1559 is just one of the many upgrades that will become the stepping stones to turn Ethereum into a highly scalable world computer with the deepest liquidity and the global hub of Decentralised Finance and NFT adoption.

Buying ETH is literally owning a piece of the internet, as it is the gateway to many of the most powerful and largest Dapps out there which are permission-less, transparent and inclusive.

As long as you have internet connection and a DeFi Wallet (eg. Metamask), you have access to the most advanced technology and financial service out there. The bankless population who were rejected by banks can now enjoy financial inclusivity and equality among other things.

Based on Ethereum Foundation’s updates and roadmap, we might even see the merge and transition towards Proof of Stake this year, and that alone is a huge catalyst for the demand of ETH. Couple that with the burning of ETH after EIP-1559 is implemented, and the extremely deep and enriched network effect Ethereum already enjoys, there is no reason Ethereum is only going to be worth less than 1 trillion market cap at the point of writing. Even just capturing 0.5% of the world’s financial services market, would mean that each ETH could be easily worth $15,000 USD or more.

Conclusion

The above are just the tip of the iceberg as to what Ethereum is all about, as it is a gigantic ecosystem with a parallel universe of its own without the spoon feeding from the central banks or governments to survive. Unlike big banks which relies on money printing and bailouts to thrive, Ethereum couldn’t care less what central bankers do.

The huge, sharp crashes proved the resilience of this new technology, and the ability to recover crash after crash, even without government stimulus, just prove how powerful blockchain technology is going to be. Banks are threatened because it threatens their existence and purpose in the economy.

I won’t be surprised to see more than half of the banks today vanishing 10 years from now. Those that embrace the technology and potential of crypto will thrive, while those that don’t will fall eventually. It’s just a matter of time.

The future of Ethereum is bright and even with the fierce competition from other layer-1 blockchains like Solana or Binance Smart Chain.

In the long run, ETH will be my biggest bag among my crypto allocation (as it already is), and I will continue to accumulate more ETH no matter how crazy Mr Market decide to be or no matter what Elon Musk decide to tweet tomorrow.

If you are not accumulating ETH, you are investing into crypto wrongly. Not financial advice though!

For those who are already into Crypto

Want to learn how you can earn high yielding interest rates on your idle crypto assets in a secure, safe and easy manner? 

Earn Yields on Those Crypto With These Platforms

You can read up more on my post  here to learn more about Celsius and Nexo which give you interest on your crypto assets 

Or read up more on Hodlnaut here which is a Singapore-based crypto lending platform with market beating interest rates

What is Bitcoin? Answers here

Or do your due diligence on Bitcoin in my post here where I debunk some of the myths regarding Bitcoin.

Gemini Exchange (My Favourite Crypto Exchange)

Also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!

Too Many Crypto Platforms? Here’s a Crypto One-Stop Solution

If you think there are too many crypto platforms out there, here is a simple solution for you. An all-in-one app for you to earn yield, trade, invest or borrow crypto with high security and assurance. Check out my Matrixport review 

What is Decentralised Finance (DeFi)?

Or do you want to learn more about DeFi in a simple to understand manner? Click here to learn more

How to Value Crypto Assets?

Learn more about how you can put a “fair value” on crypto such as Bitcoin, Ethereum and more here

Crypto Referral Links (Click and Sign Up)

Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.

Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount! 

Binance Exchange: Create a Binance.com account here and trade the widest range of crypto pairings!

Hodlnaut: Earn US$20 in BTC/ETH/USDT/USDC/DAI for free with your first transfer of US$1000 or more in the corresponding crypto asset of your choice!

Celsius Network: Earn US$40 in BTC for free with your first transfer of US$400 or more in any crypto asset and wait for 1 month!

Matrixport: Get a $1288 free coupon trial to try their product and earn $20 in USDC when you sign up successfully and become a qualified client!

Nexo: No referral events at the moment 😦 Just sign up and enjoy this great product!

Join My Tele Channel Here For Updates!

The Power of Low Fees (My US Broker!)

One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions. 

Ever since I switch to Firstrade last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far. 

Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers and Robo)

Alright that’s it! For now, think long term, tune out the noise and avoid the temptation of gambling meme stocks, think of the companies that will do well in the long run simply find bargains/dollar cost into your positions. If you need some inspiration for companies to research, you can check out my post on 5 stocks to buy if the market crashes here.

Disclaimer: 

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor.

Investing Beanstock’s Portfolio Update (Q2 2021)

A blink of an eye, half a year has already past. It was 6 months of ups and downs, especially for the stock and crypto markets. The world has not seen such a drastic and confusing macro environment, where unlimited money printing, coupled with high inflation across different asset classes like commodities, real estate, equities and more, all while the pandemic continues to ravage the economy and countries like India or Japan still facing their uphill battle against the virus.

Some Updates

Aside from me enjoying my first summer break before a new semester begins, I do have some good news to share!

Got my BTO Ballot! No. 90/105

My girlfriend and I applied for the May 2021 BTO ballot (Our first time applying for BTO) for the Telok Blangah Beacon 3-Room Unit, and we’re pleased to say we were successful in our ballot! The unit were also highly competitive given that there are only a total of 175 units for this BTO (and the last time Bukit Merah area had a BTO was 8 years ago)

We totally did not expect that and we are feeling extremely blessed and grateful to have secured a home in the near future.

That would be approximately $410K-$500K in future liability that I must now bear in mind due to the prime location near the Greater Southern Waterfront, and that is not counting in miscellaneous fees/interior design fees and even more fees. Another potential bugger is that the house will only be complete by at least 2027..

Why 3-room? Well, the point of this BTO was more of an investment standpoint, as I am confident that the prime location near GSW and the asset inflation going on right now, will indicate a massive appreciation in terms of resale prices next time. Even if I am not planning to sell it, I can rent it out for a decent 2.1K/month or more which essentially covers my future mortgages. (The house will be paying itself!)

I also managed to onboard as a Binance intern for their NFT platform, and I am extremely excited to get started as it is fully remote and the team is full of talent from all over the world with some serious accolades.

Aside from that, most readers probably knew that I have been buying the dips as I mentioned them on my Telegram Group, and the market correction that happened this quarter has not spared anyone at all.

Fear was erupting from every corner of the market for various reasons

On the stock market side, growth stocks were rapidly sold off in favour for value stocks among Wall Street, as they were concerned about the macro outlook surrounding Federal Reserve’s stance on inflation and potential rate hikes at an earlier date.

In simple terms, Wall Street deemed the future rate hikes as unfavourable for growth stocks who have yet to turn a profit and rely on borrowed money (financing) until operating profit turns positive. Higher rates = lower incentive for borrowers.

On the crypto side, manipulative behaviours by certain billionaires, authoritarian governments and a slew of mainstream media spreading fear, as well as the liquidation of greedy, leveraged traders, led to the eventual correction for the entire market and we saw Bitcoin drop from a high of $65K to a low of $30K.

Despite the depressing price actions seen in the crypto market, fundamentally speaking, there are more and more individuals adopting Bitcoin, more and more companies and smaller countries like El Salvador and Paraguay adopting Bitcoin. On-chain data also shows that more and more Bitcoin are being accumulated by long-term holders and flowing from the panic sellers to the smart money.

This is further exacerbated by the ever-growing awareness and understanding of what Bitcoin actually does and how it solves the issue of money printing, central bank control and giving back the power of decentralisation to the bankless population and kicking off a movement for freedom.

The faster people understand Bitcoin, the faster mass adoption takes place.

Current Positions

Currently, I have a total of 17 positions spread among my US stocks and crypto portfolio.

The current allocation looks like this (Bold ones are crypto and unbold ones are stocks):

RankingNamePortfolio Allocation %
1.Ethereum 14.48%
2.Square Inc14.43%
3.Etsy Inc12.70%
4.Shopify Inc12.66%
5.Teledoc Inc8.51%
6.Coinbase Inc7.72%
7.Fiverr6.28%
8.Bitcoin6.07%
9.Fantom3.76%
10.Roku Inc3.70%
11.Polkadot2.37%
12.Pancake Swap1.80%
13.Binance Coin1.47%
14.Nexo1.45%
15.Autofarm Token1.03%
16.Zilliqa0.87%
17.Band Protocol 0.70%
Portfolio Allocation (As of 26 June 2021)

I use StocksCafe to keep track of all my investments (include Robo) + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

So what have I done and what portfolio changes have I made following the changing macro trends and developments around the world? 

Bought More Stocks and Even More Crypto On The Dips

I think this one is obvious. I mentioned many times that I will be adding more crypto as the market continues to be beaten up, both by panic selling behaviours and short-sellers pushing prices down and the ever growing fear, uncertainty and doubt with the current headline news of China banning Bitcoin surfacing yet again. (This is old news since 2017.)

In particular, I have been adding Fantom aggressively because the price is simply not justified to be this undervalued based on the current stage of development, real world adoption and their technological superiority against other Layer-1 blockchains.

With the potential and real world use cases of Fantom, there is no reason the market cap of Fantom should be less than 1 billion, in fact, the ball park figure should at least match Polygon, which is a similar, yet less superior blockchain based on technology.

I will be writing an analysis on Fantom soon, so stay tuned for that.

Aside from that, here is a summary of my crypto transactions this quarter:

  1. BUY: Fantom
  2. BUY: Ethereum
  3. BUY: Bitcoin
  4. SELL: Filecoin
  5. SELL: Binance Coin (Reduced Position Size)

In the previous post too, I mentioned that I am rotating some of my stocks and below are what I did this quarter.

Here is a summary of my stocks transaction this quarter:

  1. BUY: Roku Inc
  2. BUY: Etsy Inc
  3. BUY: Coinbase Global
  4. BUY: Fiverr Ltd
  5. SELL: Unity Software
  6. SELL: Zillow Group
  7. SELL: Alibaba
  8. SELL: Altimeter Growth Corp (Grab)

On the stocks side, I wanted to concentrate fire and stick to a depth of analysis instead of breadth which might end up with me losing focus on a few key winners.

With school work and internship workload, it might also be harder to manage a big portfolio of stocks and hence I decided to concentrate on 7 positions and call it a day. At certain point, I had 20 different stock positions, but that was during NS days where I had a lot of free time nearing ORD.

Below are the breakdowns of how my portfolio looks like right now and how it fared:

Portfolio Allocation (As of 26 June 2021)
34% Crypto 66% US Stocks (As of 26 June 2021)

Yield Farming as an alternative source of passive income (A lucrative one)

Aside from HODL-ing my crypto, I am also putting them to work through Yield-Farming and the returns are incredible (I’m talking up to 500% APY or more). Only do this if you are comfortable with DeFi and understand the underlying risk.

The above allocation is not taking into account the daily yields I am accruing from my crypto because it would be too time-consuming to do that manually.

Hopefully one day someone can come up with a yield farming yield tracker that can track across many blockchain and even become integrated into StocksCafe. That would be a dream come true.

CeFi Crypto Solutions

For the centralised crypto solution side, I am currently earning passive income on the following:

  1. Hodlnaut (Earning interest on Ethereum/Bitcoin/USDT)
  2. Matrixport (Earning interest on USDC)
  3. Celsius (Earning interest on Polkadot)

The centralised crypto platforms are very impressive in my opinion, and so far I have been getting consistent returns from the 3 platforms I am currently utilising right now.

I am getting consistent returns every week and it is also compounding, which is a good thing as compound interest is the most powerful way to build wealth while I am literally doing nothing.

This path is more for passive investors who do not want to take on huge DeFi risks and if you are even more risk-tolerant, the paragraph below might appeal to you more.

DeFi Yield Farming

For those curious about where I am yield farming in DeFi, I am currently yield farming on the following blockchains and their respective Dapps:

  1. Binance Smart Chain (Autofarm) – Needs BNB as gas fees
  2. Polygon Chain (Autofarm + Curve Finance) – Needs MATIC as gas fees
  3. Fantom Opera Chain (Frankenstein.Finance + Fantom DeFi Wallet Liquid Staking) – Needs FTM as gas fees

Majority of my volatile assets like Bitcoin/Ethereum/Binance Coin for example, are yield farming in Autofarm single asset pools on Binance Smart Chain because I want to avoid impermanent loss, which in simple terms are additional risks you take on for being a liquidity provider when you provide 2 different asset to yield farm (eg. BTC-ETH or BTC-USDT)

Why Autofarm? Because they do the auto-compounding for me, has one of the lowest fees in DeFi and having one of the best farms with liquidity depth which is important if you want to be in battle-tested and “safer” farms.

As for stablecoins, I am using Polygon chain due to their low gas fees and taking advantage of some of the liquidity mining incentives offered on Polygon right now. Polygon will just be a temporary solution though, because it is also facing congestion despite the lower fees, which proves that it is also unable to handle large scale transactions.

On Fantom, there is something magical whereby stakers will not only get to earn staking rewards for staking your tokens onto the blockchain (current reward is around 14% APY), you can unlock your staked tokens by minting synthetic Fantom tokens which can be used for yield farming to earn even more profits.

This is essentially like leveraging but the good thing is that there are no borrowing fees at all for minting synthetic Fantom (sFTM).

So in essence, by doing DeFi through Fantom, you get the benefit of 14% APY from staking + cheap gas fees + fast transactions + additional yield farming, which in essence, is a real life money printer hack. (Legal!)

That is the TLDR on what I have been doing on DeFi thus far, and so far, I have been able to consistently earn 4 digit passive income per month from yield farming alone over the past few months while studying, which is way better than dividend stocks, which are mediocre at best and passive income requires an enormous capital (eg. 800K) to start making sense.

My Q2 Performance Year-To-Date

As of 26 June 2021, my Stocks + Crypto portfolio is still crushing the benchmark indexes on both a Time-Weighted and Annualised basis. This is also not counting all the passive income gains from yield farming both from centralised crypto apps and DeFi.

For my portfolio’s returns outperformance though, my portfolio also had significantly higher volatility and potential drawdown which you can see above, so while it may look like the returns are worth it, please take note of the potential price fluctuations and downside risk I took to achieve my returns.

This is not for everyone and there are massive risk to take note of, especially the crypto side. (If you didn’t understand half of what I said above for yield farming or DeFi, then you are probably not suitable for whatever I am saying, so please do your own due diligence before dipping your legs in!)

As a comparison to Q1 2021 though, my portfolio return % has reduced as a result of the growth stocks correction and crypto crash between May and June.

Right now, since the Stocks Vs Crypto Hypothetical Portfolios challenge are mixed in with my own portfolio and there is no way for me to display just my portfolio on StocksCafe just yet as well.

Crypto allocation still needs more finesse

That aside, I am still thinking of ways I can better consolidate my current crypto portfolio as having too many alt-coins might result in huge fluctuations even though I am constantly generating extra yield from it.

The price movements for alt-coins are many times more volatile than even Bitcoin or Ethereum, and not all alt-coins in my portfolio might make it in the long term, so that is just a point to note.

Those smaller crypto bets are money I am willing to lose and serves more as speculative plays especially for the smaller allocations like Band Protocol or Zilliqa where risk are imminent but likewise I am staking them via Atomic/Moonlet wallets for additional yield (12%-17% APY).

Points to Take Note

Investing in crypto is not all rainbows and butterflies. There are massive amounts of risk but in return the rewards are way higher than you can expect on the stock market.

There is always a give or take in investing, as nothing that offers high returns is without the risk as well.

Before you decide to jump into crypto due to FOMO and greed, here are some things to take note of.

  1. Lack of Due Diligence (Not understanding the crypto asset and blindly entering based on price and other’s opinions)
  2. Exchange Hack Risk (There are many scammers and hackers out there in the crypto space)
  3. Volatility-induced irrationality (Many new investors panic when they see huge price fluctuations resulting in panic selling behaviours)
  4. Hot Wallet/Cold Wallet (Need to understand the difference between the two as that is how you will store your crypto assets)
  5. Smart Contract Risk (This applies to those who are already in the crypto space, there may be smart contract bugs or loopholes that can drain liquidity so do take note of the project before putting your money in)

Some of these points apply to Stock market as well, and to new investors, if you are unsure whether you can stomach the volatility, you should start from the stock market first. 

If you are uncomfortable seeing your net worth drop 50% or more, you should not be in crypto.

Crypto is not for everyone

At the end of the day, your investment portfolio should reflect your own personality, that is why everyone’s portfolio is different and it is futile to copy another person’s portfolio if you don’t understand what you are doing.

Crypto can be a great place for investors who knows the risk of the asset class but appreciates the innovation and technology driving the space and understands the risk-reward ratio over the long term. 

If you are an individual who simply cannot take more than a 5% paper loss or cannot trust anything that is not MAS regulated, then please stay out of crypto at all cost. 

Risk and Return goes hand in hand. If you are not willing to take 50% or more potential drawdowns, don’t expect to see 200%, 300% or 600% upside returns on your portfolio over the long run. 

Every portfolio follows the Efficient Frontier with some being on the lower end and some being on the higher end, the trick to get market-beating returns is to be on the higher end of the spectrum consistently and effectively and understanding that asset allocation drives returns.

When it comes to investing in anything, I always go back to the same mantra. 

This applies to both new, intermediate and advanced investors:

Know what you own, and why you own it

-Peter Lynch

This quote by the greatest investor of all time says it all. Always do your own research before investing into anything. Don’t blindly invest because of someone else’s opinion or because someone made 100 times their money from it. Investing is all about calculated risk and if you can’t calculate your risk, you are simply speculating. 

Do research on your investments just like you would before buying a new phone, a new bag, a new shoe or going to a new company or new school. 

You spent months or years to accumulate those savings. Don’t lose it because of laziness or greed. Do proper research and be curious! And then returns and profits will follow.

Going Forward (Q3 and beyond)

Moving forward, I am still consolidating my alt-coin positions to limit my downside risk further and the current dip has been a warning to me to not over-allocate to the more risky plays and stick to the blue-chip crypto coins to limit my downside.

I am currently suffering from a significant paper loss on my crypto portfolio but my stocks side managed to back it up and thus my overall returns this year remains positive.

My stocks portfolio is more or less fixed as my positions are growth oriented and the companies I am invested in are mostly younger companies with lots of room for further growth.

For those who are already into Crypto

Want to learn how you can earn high yielding interest rates on your idle crypto assets in a secure, safe and easy manner? 

Earn Yields on Those Crypto With These Platforms

You can read up more on my post  here to learn more about Celsius and Nexo which give you interest on your crypto assets 

Or read up more on Hodlnaut here which is a Singapore-based crypto lending platform with market beating interest rates

What is Bitcoin? Answers here

Or do your due diligence on Bitcoin in my post here where I debunk some of the myths regarding Bitcoin.

Gemini Exchange (My Favourite Crypto Exchange)

Also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!

Too Many Crypto Platforms? Here’s a Crypto One-Stop Solution

If you think there are too many crypto platforms out there, here is a simple solution for you. An all-in-one app for you to earn yield, trade, invest or borrow crypto with high security and assurance. Check out my Matrixport review 

What is Decentralised Finance (DeFi)?

Or do you want to learn more about DeFi in a simple to understand manner? Click here to learn more

How to Value Crypto Assets?

Learn more about how you can put a “fair value” on crypto such as Bitcoin, Ethereum and more here

Crypto Referral Links (Click and Sign Up)

Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.

Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount! 

Binance Exchange: Create a Binance.com account here and trade the widest range of crypto pairings!

Hodlnaut: Earn US$20 in BTC/ETH/USDT/USDC/DAI for free with your first transfer of US$1000 or more in the corresponding crypto asset of your choice!

Celsius Network: Earn US$40 in BTC for free with your first transfer of US$400 or more in any crypto asset and wait for 1 month!

Matrixport: Get a $1288 free coupon trial to try their product and earn $20 in USDC when you sign up successfully and become a qualified client!

Nexo: No referral events at the moment 😦 Just sign up and enjoy this great product!

Join My Tele Channel Here For Updates!

The Power of Low Fees (My US Broker!)

One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions. 

Ever since I switch to Firstrade last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far. 

Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers and Robo)

Alright that’s it! For now, think long term, tune out the noise and avoid the temptation of gambling meme stocks, think of the companies that will do well in the long run simply find bargains/dollar cost into your positions. If you need some inspiration for companies to research, you can check out my post on 5 stocks to buy if the market crashes here.

Disclaimer: 

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor.

Thoughts On The Current Market And Doubling Down On Market Dips

What a slew of bad news, fear, uncertainty and doubt right now. The crypto market took a huge nose dive after news of China clamping down on Bitcoin mining in Sichuan and major Chinese banks taking a harsh stance against Bitcoin and on-ramps.

This sudden, aggressive and swift clamp down on crypto is nothing new. In fact, China has been trying to shut down Bitcoin for the longest time since 2017, 2018, 2019. So the current clamp down is really nothing new.

I shall keep this post short, as I don’t like to dwell too much on short term price actions and rather focus on long term fundamentals.

Bitcoin is decentralised for a reason

Bitcoin is not a company and has no CEO, the fact that it is leaderless (decentralised) means that it is impossible to clamp down 100%.

Bitcoin was born out of the internet, and the only way to shut Bitcoin down is if the entire internet gets shuts down. When that really happens, I guess the world is probably ending.

The future of Bitcoin is the same as before. As more people/companies/governments/countries understand and adopt Bitcoin, fundamentals will follow. (AKA price will still go up.)

The current clamp down is just fear, noise and uncertainty. If you are a long term investor, this should be a perfect opportunity to accumulate while others are fearful.

To attain a 100-bagger, we need the vision to see them, courage to buy them, and patience to hold them.

Holding Bitcoin through turbulent times like this is a prime example for myself.

What Did Investing Beanstock Do Recently

During the current turbulent and confusing market, I did the following:

Crypto:

  1. Transferred all my Bitcoins into DeFi protocol Autofarm (Binance Smart Chain) to yield farm – Current APY: 10%-14% APY (Belt.Finance Tokenised BTC)
  2. Bought heavily into Fantom (FTM) during the severe crash, totalling up to 5 buy-ins (at the point of writing)
  3. Transferred some my Ethereum from Nexo to Hodlnaut (6% APY –> 6.7% APY)
  4. Remaining Ethereum and other alt-coins are in DeFi Protocols, still being yield farmed (13% APY – 115% APY)

Stocks:

  1. Sold my entire Alibaba position (Cut loss) due to weak sentiments and opportunity cost reasons.
  2. Rotated the capital into Roku Inc (New Position)
  3. Averaged-Down on Etsy and Coinbase

As you can see above, I did not sell any of my crypto (even though portfolio is in a loss right now), but instead bought more (Fantom) and transferred my crypto assets into yield farming protocols to earn passive income from them.

The only “Sell” I made was on Alibaba. While it was a tough decision as I am bullish on Alibaba long term, it was too much of an opportunity cost to miss the averaging in on Coinbase due to irrational fear surrounding crypto.

I have come to realise that if I am already exposing myself to the most volatile asset class (aka Crypto), I might as well focus on smaller-cap growth stocks with higher room for growth than large-caps like Alibaba.

I also rotated the capital into my other E-commerce position, Etsy. Etsy at current price points is fairly valued in my view and seldom is there a scenario that Etsy is down 30% from its high. As for Roku, the growth numbers are insane and so I had to hop on the train before it goes away.

Overall, my investing strategy have not changed. I remain a “Net Buyer” of stocks and crypto as I continue to accumulate assets over the long term.

Nothing about crypto changed fundamentally despite the price action, and I urge readers to build conviction through research, due diligence and self-realisation about the utility and potential that crypto can bring about to our lives.

Crypto is still very early

Crypto is after all an extremely young asset class. With a market cap of less than 2 trillion at the point of writing, there is still so much room for growth. For perspective, the stock market is approximately 100 trillion, while the market cap for gold is roughly 10 trillion.

Innovation takes time for mass adoption, and although we are not there yet, stepping stones are already laid in place which makes us on track towards mass adoption.

The Next 10 Years will be a Wild Ride

The next 10 years will be filled with chaos and uncertainty for sure. With central banks flooding the market with cash and liquidity, the side effects after these easing measures are removed will be detrimental to the market for sure.

Inflation will kick in, tax rates will go higher and more people might lose their livelihood.

Right now, the stock market is being propped up by the central banks, and one day when the central banks ultimately close or tighten the money printing taps, we may see capitulation the magnitude of 2008 but that remains to be seen. No one knows what will happen in the future.

The most fool proof way is still to dollar-cost average into the market, and to remain disciplined while the market continues to be in turmoil. Emotions is the number 1 killer of returns and wealth creation, having the ability to control one’s emotion during a crash is not only rare, but once attained, will ensure that you will remain rational and solvent when volatility shoots up.

Remember, volatility is a feature, not a bug. Take advantage of volatility and use the dips as an opportunity to accumulate, if not, just dollar cost average consistently.

What I learnt

I am constantly trying to apply this concept too when I invest, and I do make mistakes as well. The current market taught me to always reserve a war chest in case of any massive dips to buy into the market constantly.

The number of people that are still skeptical about crypto and blockchain in general, is still bewildering to me. Perhaps they don’t yet understand the problem with money printing and centralisation.

Here is an article for all if you want to find out why Bitcoin is the solution to the problems central banks are causing.

Hope everyone is doing well. Ignore the noise, think long term, and enjoy the ride. Peace.

For those who are already into Crypto

Want to learn how you can earn high yielding interest rates on your idle crypto assets in a secure, safe and easy manner? 

Earn Yields on Those Crypto With These Platforms!

You can read up more on my post  here to learn more about Celsius and Nexo which give you interest on your crypto assets 

Or read up more on Hodlnaut here which is a Singapore-based crypto lending platform with market beating interest rates!

What is Bitcoin? Answers here

Or do your due diligence on Bitcoin in my post here where I debunk some of the myths regarding Bitcoin.

Gemini Exchange (My Favourite Crypto Exchange)

Also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!

Too Many Crypto Platforms? Here’s a Crypto One-Stop Solution

If you think there are too many crypto platforms out there, here is a simple solution for you. An all-in-one app for you to earn yield, trade, invest or borrow crypto with high security and assurance. Check out my Matrixport review now!

What is Decentralised Finance (DeFi)?

Or do you want to learn more about DeFi in a simple to understand manner? Click here to learn more!

How to Value Crypto Assets?

Learn more about how you can put a “fair value” on crypto such as Bitcoin, Ethereum and more here!

Crypto Referral Links (Click and Sign Up)

Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.

Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount! 

Binance Exchange: Create a Binance.com account here and trade the widest range of crypto pairings!

Hodlnaut: Earn US$20 in BTC/ETH/USDT/USDC/DAI for free with your first transfer of US$1000 or more in the corresponding crypto asset of your choice!

Celsius Network: Earn US$40 in BTC for free with your first transfer of US$400 or more in any crypto asset and wait for 1 month!

Matrixport: Get a $1288 free coupon trial to try their product and earn $20 in USDC when you sign up successfully and become a qualified client!

Nexo: No referral events at the moment 😦 Just sign up and enjoy this great product!

Join My Tele Channel Here For Updates!

StocksCafe

I use StocksCafe to keep track of all my investments + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

The Power of Low Fees

One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions. 

Ever since I switch to Firstrade last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far. 

Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers and Robo)

Alright that’s it! For now, think long term, tune out the noise and avoid the temptation of gambling meme stocks, think of the companies that will do well in the long run simply find bargains/dollar cost into your positions. If you need some inspiration for companies to research, you can check out my post on 5 stocks to buy if the market crashes here.

Disclaimer: 

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor.

Stocks or Crypto? Which Portfolio Will Generate the Most Returns?

Stocks or Crypto? Which one will give the best returns? This is a question I hear very often, and something I am curious to know as well.

Historically speaking, given crypto’s short lifespan of around 12 years, we cannot gauge a long term historical performance like stocks do.

Based on a 100-year span though, we know that equities (stocks) outperform every asset in existence. (before Crypto)

So today, I will be coming up with 3 different portfolios, each with their own unique investment thesis and viewpoints that I will explain further below.

Portfolio Criteria

The criteria is simple. All three portfolios will have a total of 5 positions, with allocations spread evenly (20% weighting each) at a starting capital of $100,000 USD.

All 3 portfolios were started at the same time, and the stock prices were taken as the closing price on 18th June 2021. As for crypto, their prices were taken as of the time of writing on 20th June 2021.

The portfolio inception date is 20th June 2021, no rebalancing will be done, no additional buy-ins, no sell-offs, all 3 portfolios will just naturally grow into their new allocations.

Returns will be purely based upon future returns.

This will give equal opportunity for each portfolio to demonstrate their growth potential, and used as arguments as to whether stocks, stocks ETF, crypto or combination of both will provide better overall returns.

Results will be tracked and published on a semi-annual basis for more meaningful analysis and performance.

Here are the portfolios:

Portfolio 1: 100% Equities-Growth ETF Picks

As of 20 June 2021
  1. QQQ (Invesco QQQ ETF) – 20%
  2. ARKK (ARK Innovation ETF) – 20%
  3. ARKG (ARK Genomic Revolution ETF) – 20%
  4. ARKF (ARK Fintech Innovation ETF) – 20%
  5. WCLD (WisdomTree Cloud Computing ETF) – 20%

Total: $100,000 USD

Portfolio’s Reasoning

The reasoning for this portfolio is simple. It is for individuals investors who prefers passive investing, but have a more aggressive risk appetite with a strong preference for high-growth ETFs.

The 5 ETFs in play are overweight on Technology, with a diversification across NASDAQ-100, Fintech, Genomic Revolution, Cloud Computing and Disruptive Innovation.

Some may call it a speculative bet on the future, but historically speaking, these 5 ETFs have very strong 3-digits performance over the past years and managed to outperform the market in the medium term.

Such portfolios may favour investors with a time horizon of 10 years or longer, focuses on capital appreciation and does not care about short-term volatility.

They are bullish about the future of innovation and technological advancements, but at the same time wants to diversify through the use of ETFs as they are not confident with their stock picking or too busy to research on individual companies.

As of 20 June 2021

Year-To-Date return wise, it may not look that great because of the shift from Growth towards Value on Wall Street, and also the fear from the Federal Reserves’ rate hikes and tapering measures that can spell bad news for growth stocks that are yet to be profitable.

However, I personally think this is a good chance to enter as such huge momentum shifts are rare, and may present itself as a bargain for long term investors. (Not financial advice!)

Portfolio 2: The “Community-Pick” Portfolio

As of 20 June 2021
  1. Bitcoin – 20% (Crypto)
  2. Ethereum – 20% (Crypto)
  3. Tesla – 20% (Stocks)
  4. Apple – 20% (Stocks)
  5. Zilliqa – 20% (Crypto)

Total: $100,000 USD

*Slight deviation due to crypto prices

Portfolio’s Reasoning

This portfolio was voted by the Seedly Community based on the questions shown above.

The most popular options were surprisingly Bitcoin, Ethereum and Tesla. While Tesla wasn’t surprising, I was amazed at how many people actually preferred crypto as their top 5 picks for the challenge instead of stocks or ETFs.

Looks like the paradigm shift is happening faster than I expected.

This portfolio consist of a total of 2 stocks, represented by large cap companies Apple and Tesla. The other 3 consist of Bitcoin, Ethereum and Zilliqa, with the first 2 being the largest cryptocurrencies and Zilliqa as the wild card.

A short primer on Zilliqa (ZIL)

For those who don’t know what Zilliqa is, it is a high performance blockchain that was the brainchild of a group of PhDs in academia, from the National University of Singapore (NUS). It was later developed into a bigger project and is currently the only blockchain with sharding technology built-in from the beginning.

Sharding, basically solves the blockchain trilemma of Scalability, Security and Decentralisation.

The picks are very well thought out in my opinion, and shows the conviction that Seedly users have in blockchain technology as well as large-cap growth companies like Tesla and Apple.

Return potential wise, it is a strong contender for sure and the investment thesis is similar to portfolio 1, since it is likewise bullish on technological advancements, with an emphasis on the Apple ecosystem and the future of EV (Electric Vehicles) technology and renewable energy.

Bitcoin and Ethereum are strong contenders over the long term given their position as the top 2 crypto out there and Zilliqa might see explosive gains if network effects were to deepen further. (Due diligence required)

As of 20 June 2021

Year-To-Date return wise, the community picks are currently outperforming the market by a significant margin!

Sometimes picking the brains of community members and cutting your research time by half may be a good strategy eh? I’m just joking. Please do your own research when it comes to any form of investments!

It remains to be seen which position will breakout and carry this portfolio, but my bets would be on Ethereum.

Regardless, a strong portfolio in my opinion.

Portfolio 3: 100% Crypto Picks (By yours truly)

As of 20 June 2021
  1. Ethereum – 20%
  2. Fantom – 20%
  3. Sushiswap – 20%
  4. Binance Coin – 20%
  5. Chainlink – 20%

Total: $100,000 USD

*Slight deviation due to crypto prices

Portfolio’s Reasoning

This portfolio is 100% crypto, so there needs to be extreme conviction about the future of cryptocurrencies and understanding of the fundamentals of each crypto token above.

Do note that I did not choose Bitcoin for this portfolio, because the goal was to maximise returns potential on my high conviction bets of crypto’s future. They are also classified as alt-coins, and extreme volatility on gains and loss should be expected.

The volatility will be much higher if you were to compare it to portfolio 1 and 2, and by picking portfolio 3, is like becoming a venture capital looking for the next 10X or 30x potential return on capital.

While the portfolio consist of crypto blue-chips such as Ethereum, Binance Coin and Chainlink, we have smaller-cap crypto such as Fantom and Sushiswap in the mix.

They are the potential “Ten-Baggers” opportunities that I am bullish on as Fantom is already seeing widespread real world adoption in the Middle East, in talks with the United Nations to adopt their blockchain for their CBDC Stablecoin, and increasing awareness and adoption from DeFi users after the disappointing congestions on Polygon and Binance Smart Chain.

Why Fantom? Try googling “What is the fastest blockchain in the world” on Google 🙂

As for Sushiswap, the younger brother of Uniswap, present itself as a multi-chain Decentralised Exchange (DEX) that exist on almost every blockchain. The potential for Sushiswap is huge and looks undervalued based on their transaction volumes and market cap. Please do your own research if you are interested in Sushiswap!

Return potential wise, I am confident that this portfolio will not only outperform benchmark indexes like S&P 5oo, but to outperform the other 2 portfolio on this list as well.

If I were to start investing all over again with the knowledge and experience I have gained so far, I would pick Portfolio 3 for sure.

Aside from the sharp drawdowns and short term volatility which will be expected from this portfolio, long-term wise, I am sure this portfolio will be able to yield me handsome returns in the long run.

So lets see if the community picks do better, or maybe I’m just a bad investor, haha!

As of 20 June 2021

Year-To-Date return wise, this portfolio is not only crushing the market like a piece of cake, it will be a ~3X return on capital if you started investing into this portfolio on 1 January 2021. Yeah, I feel you, should have done that right?

Hindsight bias at play.

Instead of FOMO-ing, you should be doing your due diligence and find undervalued gems when the market is screaming fear and there’s “blood in the streets.”

What this means is, it is the best time to accumulate when others are feeling bearish and fearful of the market because, only when there is a dump, will there be a pump.

You can’t expect prices to keep going higher without experiencing a correction first. Investment returns in risk-on assets are bound to see ups and downs.

In fact, prices going down actually lowers the risk of a huge crash, and increases your margin of safety greatly over the long term, not the other way round.

The next time you feel fearful about buying, just think about this sentence. (Of course you need to make good investment decisions, this does not apply for meme stocks/crypto or sh*tcoins with no fundamentals)

Whether or not this portfolio continues to crush the market like it currently is, depends on Bitcoin’s price movements though.

After all, majority of crypto’s market cap resides in Bitcoin, so if Bitcoin were to dump, alt-coin prices will dump even harder. (Reverse is also true)

If Bitcoin manage to maintain its momentum and breakout from the current sideway market it is stuck in, then it is almost certain that this portfolio will continue to dominate returns wise.

So Which Portfolio Will Win?

Now that the 3 test portfolios have been constructed, we shall see which portfolio will rake in the highest alpha.

No one knows the future, and no one has a crystal ball. Only time will tell which of them outperformed the market (and by how much).

The stocks vs crypto argument shall be tested in this little experiment too, as I will be tracking this portfolio closely. If crypto were to really outperform stocks by a huge margin, I might just convert to a 100% crypto portfolio myself. Only time will tell.

So which side did you pick? Stocks? Or Crypto? Or ETFs? What is your long term outlook on the market? Leave those comments down below!

For those who are already into Crypto

Want to learn how you can earn high yielding interest rates on your idle crypto assets in a secure, safe and easy manner? 

Earn Yields on Those Crypto With These Platforms!

You can read up more on my post  here to learn more about Celsius and Nexo which give you interest on your crypto assets

Or read up more on Hodlnaut here which is a Singapore-based crypto lending platform with market beating interest rates!

What is Bitcoin? Answers here

Or do your due diligence on Bitcoin in my post here where I debunk some of the myths regarding Bitcoin.

Gemini Exchange (My Favourite Crypto Exchange)

Also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!

Too Many Crypto Platforms? Here’s a Crypto One-Stop Solution

If you think there are too many crypto platforms out there, here is a simple solution for you. An all-in-one app for you to earn yield, trade, invest or borrow crypto with high security and assurance. Check out my Matrixport review now!

What is Decentralised Finance (DeFi)?

Or do you want to learn more about DeFi in a simple to understand manner? Click here to learn more!

How to Value Crypto Assets?

Learn more about how you can put a “fair value” on crypto such as Bitcoin, Ethereum and more here!

Crypto Referral Links (Click and Sign Up)

Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.

Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount! 

Binance Exchange: Create a Binance.com account here and trade the widest range of crypto pairings!

Hodlnaut: Earn US$20 in BTC/ETH/USDT/USDC/DAI for free with your first transfer of US$1000 or more in the corresponding crypto asset of your choice!

Celsius Network: Earn US$40 in BTC for free with your first transfer of US$400 or more in any crypto asset and wait for 1 month!

Matrixport: Get a $1288 free coupon trial to try their product and earn $20 in USDC when you sign up successfully and become a qualified client!

Nexo: No referral events at the moment 😦 Just sign up and enjoy this great product!

Join My Tele Channel Here For Updates!

StocksCafe

I use StocksCafe to keep track of all my investments + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

The Power of Low Fees

One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions. 

Ever since I switch to Firstrade last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far. 

Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers and Robo)

Alright that’s it! For now, think long term, tune out the noise and avoid the temptation of gambling meme stocks, think of the companies that will do well in the long run simply find bargains/dollar cost into your positions. If you need some inspiration for companies to research, you can check out my post on 5 stocks to buy if the market crashes here.

Disclaimer: 

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor.

How To Value Crypto Assets Like Bitcoin

“Bitcoin has no value because it is not backed by anything!” I hear this all the time from Bitcoin skeptics.

The funny thing is, fiat currency (or cash) that we know today is likewise not backed by anything other than the government’s trust and belief that the piece of paper is of any value at all.

Ever since the collapse of the Bretton Woods system where USD was backed by Gold, fiat currencies have been experiencing a rapid decline thanks to the unlimited money printing going on which effectively devalues the dollar and every other paper currency around the world and that includes SGD.

While today’s topic is about how to value crypto assets, it is important to understand what is money in the first place.

Now, to say that Bitcoin has no value simply because it is not backed by anything, is the same way as saying how USD is not backed by any hard asset at all.

Before you go on and say that the USD is backed by the US government, let’s ask why things like the Mona Lisa painting or diamonds have “value” even though they don’t produce any value and likewise not backed by any hard assets.

Scarcity

What makes something valuable? That has to do with the fundamental economic concept of scarcity.

When something is said to be scarce, it means that the supply of the items are limited.

If there is demand for the item with limited supply, and assuming that the demand goes higher, that will only mean that the price or “value” of the item will go higher.

There is only 1 authentic Mona Lisa painting that is hand painted by Leonardo Da Vinci himself, who is one of the most prominent inventor, artist, scientist and human to ever lived in the history of mankind.

So what gives Mona Lisa such prestigious value? Isn’t it just paint and paper?The simple answer is scarcity. There is only ONE such painting in the whole world.

Coupled with the fact that famous Kings and Queens used to own them, it is no wonder the painting became so precious and of immense value because there is only one such painting in the whole world and it can never be replicated ever again.

Now let’s talk about diamonds. There is literally no utility in diamonds other than the fact that it is a highly sought after jewellery item worn for special occasions such as a proposal ring.

Diamonds and Charcoal are literally made of the same element (Carbon) but what makes diamond so much more valuable than carbon is the fact that it is very difficult to extract diamonds since they only form under high pressure which gives it a different structure than charcoal and the hardest object on Earth.

Now, let’s go on to talk about Bitcoin. The reason why Bitcoin is valuable is because there will only ever be 21 million Bitcoin in circulation.

That makes Bitcoin a perfectly scarce asset as we can track the total supply of Bitcoin and as Bitcoin supply continues to decrease while assuming demand for Bitcoin to remain constant, simple economics will tell you that the price of Bitcoin will continue to go higher.

Enter the Stock-To-Flow Model

The above image is one the most famous valuation method used to measure the price of Bitcoin. It was pioneered by a pseudonymous individual known as PlanB who is a retired institutional investor and currently runs a Bitcoin node himself.

The Stock-To-Flow Model is not new at all. It is commonly used to value the price of scarce commodities such as Gold, Silver and Platinum.

The model shows how many years, at the current production rate, are required to achieve the current stock. The higher the number, the higher the price.

Stock to flow is defined as a relationship between production and current stock that is out there.

Why is it important?

One key feature of Bitcoin is the halvings which happens every 4 years. This gives Bitcoin and the crypto market the unique 4 year cycles that we see today where we see a period of bull market and a period of bear market until the next halving occurs.

Halving events will continue taking place until the reward for miners reaches 0 BTC.

The last Bitcoin to be mined into existence will be mined in the year 2140. It will be the 21 million’th Bitcoin to come into existence, and last, after which point it will be impossible to create anymore Bitcoin.

From then on, Bitcoin will become truly deflationary, since printing/minting or mining new coins will no longer be possible, and if owners keep on losing their private keys, as they currently are, then the supply would further deflate by that lost-keys ratio.

All of these points towards Bitcoin’s scarcity. As of the time of writing, there are currently around 18.7 million Bitcoin already in circulation, couple that with millions of lost Bitcoins in zombie wallets, you can do the math and see how high Bitcoin still can grow based on how many Bitcoin is left.

Metcalfe’s Law (Network Effect)

Another metric we can look at when discussing how to value crypto assets is Metcalfe’s Law, which is a method for us to gauge the network effects of a blockchain network.

Originally used to describe communicative devices like telephones,  the theory was later refined in 1993.

In its simple form, Metcalfe’s Law states that the value of a network is proportional to the square of the number of participants in the network. 

What this valuation tells us is that the growth of a network will be exponential over the long run as the network effects deepen.

As seen from the chart above, as the number of users increase significantly, the economic margin per value for the user will increase exponentially. This is also why we often see crypto prices going parabolic and follows an exponential graph simply because of Metcalfe’s Law.

Metcalfe Ratio

The chart below features the Metcalfe Ratio, which is the amount of active addresses of network and Bitcoin’s price.

Metcalfe Ratio shows both indicators rising in close correlation, and also showing that as the number of active addresses in Bitcoin holding increases, so does the price of Bitcoin subsequently.

This likewise applies to other crypto such as Ethereum, Polkadot, Binance Coin and more. Depending on the tokenomics of each crypto, the Metcalfe Ratio may or may not make sense.

If you use the ratio to evaluate an inflationary token such as Pancake Swap (CAKE), it might not accurately determine the price in the long run given that the token is not meant for long term holding unless deflationary mechanics are introduced through subsequent governance voting.

Bitcoin NVT

Network Value to Transactions Ratio (NVT) is a metric for identifying when the USD price of a digital asset has exceeded or fallen below the value suggested by its underlying daily USD transaction volume. 

Bitcoin’s NVT is calculated by dividing the Network Value (market cap) by the the daily USD volume transmitted through the blockchain.

In essence, the correlation between NVT and Bitcoin’s price were close during the recent rallies and dumps which helps us determine the “fair value” of Bitcoin but do note that is is simply an estimate and should not be used as a form of guranteed price gain for Bitcoin.

Total Addressable Market (TAM)

Another way you can evaluate the value of a crypto is by determining what is the potential Total Addressable Market of the ecosystem.

Bitcoin as Gold 2.0

We can take Bitcoin for example. By being digital Gold, Bitcoin should at least be equal to the market capitalisation (Market Cap) of Gold, which is currently around 10 trillion USD.

With a total addressable market of 10 trillion USD or more, if Bitcoin were to reach the market cap of Gold, that would imply a price of approximately $500,000 USD per Bitcoin, making Bitcoin a 10 trillion USD asset.

Ethereum as the New Internet (Web 3.0)

As for Ethereum, if we were to see the potential TAM of Ethereum, that would be the entire financial system which includes the stock market, lending/borrowing, pension funds, money markets, insurance and many more.

As for the TAM potential, it will be way beyond our imagination and it will probably be way beyond the market cap of Bitcoin thanks to the development of Decentralised Finance and laying the foundation of the new internet.

Bitcoin does very well at doing ONE thing

The reason why Bitcoin is the King of Crypto and might always remain so is because it does ONE thing very well, and that is to be a durable, honest and perfectly scarce store of value that is transparent and cannot be stopped or replaced.

The fact that there will only ever be 21 million Bitcoins, generated by the Proof-Of-Work consensus and every transactions being fully traceable and immutable, makes Bitcoin the perfect Store-Of-Value and a way to hedge against currency debasement.

Fiat currencies like USD or Euros on the other hand, are meant to be used as a medium of exchange for goods and services.

Governments have to print more fiat currencies to keep their economies competitive and to incentivise spending in the economy.

Fiat currency will continue to lose its value over the long run and the only way to protect your monetary value or wealth in the long run is by holding assets like Bitcoin.

Forget the short term volatility of Bitcoin because that is the entrance ticket to the best in class Store of Value that will remain rightfully so because of Bitcoin’s characteristics.

Cash is meant to be spent and not held long term, while Bitcoin is meant to be held long term and not meant to be spent. The faster people understand this concept, the faster we see mass adoption take place.

With El Salvador being the first country to declare Bitcoin as legal tender, I expect to see a “Domino Effect” play out over the next few years and as more people understand the significance of Bitcoin and its purpose to hedge individual’s wealth over the long term, there is still more work to be done to educate the masses and spreading awareness of what Bitcoin is all about.

Lightning Network and Strike App

I just want to bring up an important development that is going on with Bitcoin. Currently, because Bitcoin transactions take 10 minutes to go through, there have been developments to improve Bitcoin’s utility as a medium of exchange through a layer-2 solution known as the Lightning Network.

Lightning Network allows individuals to form a separate channel to transact Bitcoin within seconds, allowing smaller transactions such as buying groceries or paying for a meal. Transaction literally takes 0 seconds and transaction fees are also non-existent.

This is also the reason why El Salvador adopted Bitcoin, as they were able to transact Bitcoin easily through the Strike App which has built in function to access the Lightning Network and allow Bitcoin transactions to be instantaneous and zero fee.

Only time will tell when Bitcoin Standard start to hit the shores of sunny Singapore and I am extremely excited about the future.

There are more valuation methods out there

The valuation methods I talked about in this post is not exhaustive and there are more ways to value different crypto assets, but the moral of the story here is that traditional valuation methods that analyst and investment bankers used to evaluate businesses such as DCF, EV/Sales, SOP Analysis does not apply to crypto as crypto assets are not companies that generate income.

It is the same analogy as saying you are valuing the price of a pancake by comparing it to the price of a sports car. They are 2 completely different things. You can’t evaluate them the same way.

Traditional Finance has a misunderstanding of Crypto

The challenges for new investors and how we know if crypto is here to stay is by first understanding and identifying this nascent asset class that is still in its infancy with exponential room for growth in the future.

Traditional finance folks who grew up understanding finance and economics are having a hard time understanding this new asset class and often think of crypto as similar to stocks.

They are 2 very different things! Stop thinking of them the same way!

Most People Just Don’t Bother

Couple this misunderstanding with the fact that 99% of crypto skeptics have probably not read a single line of the Bitcoin Whitepaper before, or the fact that their research is based upon old mathematical models and old valuation concepts.

Most individuals despise Bitcoin (or crypto for the matter) when they don’t understand or even bother to understand more about it or worse, dismiss the idea without even spending the time to try and understand this new asset.

It is very easy to criticise something you don’t understand, but not easy to understand something you criticise.

So before you go on and accuse Bitcoin of being a scam again, I implore you to at least read the Bitcoin Whitepaper and build some understanding before starting an argument.

What happens in the future?

Opinions will change as more people understand. As more and more individuals become aware of the problem Bitcoin or crypto is trying to solve, more skeptics will turn into investors for sure.

Just look at Bitcoin skeptics like Michael Saylor, Mark Cuban, Howard Marks, Ray Dalio or Paul Tudor Jones, as they understand more about Bitcoin, their initial opinion that Bitcoin is nothing but a scam has changed over time.

Always keep an open mind and question everything around you. Why do fund managers hold Gold? Why don’t rich people hold most of their allocation to cash? What will inflation do to my money?

The more you ask these questions, the more you will understand crypto and the things they are trying to solve.

Conclusion

Bitcoin, Ethereum, Doge… The list goes on. Cryptocurrency is only 12 years old. It is still early. Do your own research, question everything that is going on and understand how crypto work.

Even if you feel that crypto is a high risk asset to invest in due to volatility, zoom out, and think like an early Amazon or Apple investor: With so much uncertainty (competiton from incumbents like Book stores and Nokia respectively), how did they held through years of volatility and manage to 10X or 30X their initial capital?

The answer lies in: Conviction. The early investors understood what Amazon or Apple does, they understood the risk, they understood its potential, and they understood having an investor’s mindset.

They held through thick and thin, through bad news after bad news, market crash after market crash.

That is the price to pay for a multi-bagger. If those sound too scary for you, at least invest into an S&P 500 ETF and get market returns.

Inflation only goes up, and the only way to hedge against inflation is by owning assets that appreciate over time.

With that, how high would Bitcoin’s price be by the end of 2021? Leave your guesses in the comments below! Let’s have a fun discussion!

For those who are already into Crypto

Want to learn how you can earn high yielding interest rates on your idle crypto assets in a secure, safe and easy manner? 

You can read up more on my post  here to learn more about Celsius and Nexo which give you interest on your crypto assets or read up more on Hodlnaut here which is a local based crypto lending platform with market beating interest rates!

Or do your due diligence on Bitcoin in my post here and also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!

Or do you want to learn more about DeFi in a simple to understand manner? Click here to learn more!

Crypto Referral Links (Click and Sign Up)

Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.

Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount! 

Binance Exchange: Create a Binance.com account here and trade the widest range of crypto pairings!

Hodlnaut: Earn US$20 in BTC/ETH/USDT/USDC/DAI for free with your first transfer of US$1000 or more in the corresponding crypto asset of your choice!

Celsius Network: Earn US$40 in BTC for free with your first transfer of US$400 or more in any crypto asset and wait for 1 month!

Matrixport: Get a $1288 free coupon trial to try their product and earn $20 in USDC when you sign up successfully and become a qualified client!

Nexo: No referral events at the moment 😦 Just sign up and enjoy this great product!

Join My Tele Channel Here For Updates!

StocksCafe

I use StocksCafe to keep track of all my investments + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

The Power of Low Fees

One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions. 

Ever since I switch to Firstrade last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far. 

Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers and Robo)

Alright that’s it! For now, think long term, tune out the noise and avoid the temptation of gambling meme stocks, think of the companies that will do well in the long run simply find bargains/dollar cost into your positions. If you need some inspiration for companies to research, you can check out my post on 5 stocks to buy if the market crashes here.