CHALLENGE: I AM STAKING HALF MY ANNUAL SALARY TO MAKE MORE THAN MY ANNUAL SALARY
You make $40,000/YR
The Goal - Stake $20,000 and make an additional $40,000
So Total Assets equals $60,000 at the End of Year
Target Annual Percentage Rate (APR) = 110% (You need to maintain 110% or better) to achieve this goal.
If you average 110% APR on your investment over the year that will = 199.9201% (Rounding up to 200%) Annual Percentage Yield (APY) with daily compounding your earnings.
A 200% APY means your interest equals 2x your investment.
If you want to check my math here is a link to a handy Compound Interest Calculator - https://financial-calculators.com/compound-interest-calculator
NOTE - To cover daily fees for reinvesting your earning I target at least 1 extra percentage point and leverage the cheap fees on the Binance Smart Chain (111%) if you do this on the Ethereum Network count on needing to offset much higher fees.
WHAT IS WORKING SO FAR:
Current Setup: 50% OF FUNDS: - Earning 95% APR - PancakeBunny CAKE Pool - Auto Compounding - but only the CAKE so still needs to be compounded daily - Earning CAKE and BUNNY 50% OF FUNDS: Earning 144% APR Pancake Bunny -BUNNY Pool Earning WBNB used to buy Bunny or CAKE daily to compound and even out pools.
Combined APR = 119.5%
NOTE - Pools APR fluctuates daily but has maintained above target 110% Goal
WHY DID I PICK THESE INVESTMENTS:
I believe the CAKE coin has more short term upside in price than BUNNY so I am splitting half on CAKE with the lower interest rate and half on BUNNY to maintain my target APR.
I believe these may be viable options until Eth 2.0 is imminent. Cardano (ADA) smart contracts will also likely be a disruptor so I am watching that carefully. There is a good chance as Eth 2.0 and Cardano inevitably see the launch of new AMM (Automated Market Makers) and dApps (decentralized Apps) that I will explore for competitive APRs and secure underlying assets. I have already DCA into ADA for a while in anticipation of having to possibly sell off CAKE and BUNNY at some point and move to a Cardano AMM
NOTE: I don’t chase the 1000% plus pools and farms… they ARE real but usually require buying a lot of a coin I don’t trust, the other issue is those high APR’s are usually only introductory and after a day or two it usually drops below what I am already achieving. Basically it is too much to manage and adds risk.
There are of course tons of risks to this challenge. I am not a financial advisor and of course you should DYOR
#1 - Personally I am avoiding staking Liquidity Pairs to avoid Impermanent Loss - Crypto is an inherently volatile space and I feel it will be too much to manage against impermanent loss if I am running multiple LP Farms. If you don’t know what Impermanent loss is Google it, it is basically when the two Assets you have tied together in a Liquidity pool start to move in opposite directions of each other it can cause you to lose money. LP’s may be my only option at some point to continue to hit target APR.
#2 Staking an asset that loses value - If your farm is making you the targeted 110% but the underlying asset keeps losing value and won’t rebound… You could easily lose money.
#3 Will I be able to find opportunities to stake at/over 110% for an entire year?
#4 You need to compound daily to hit targets - some options have auto compounding, some do not - this will take a bit of maintenace.
#5 You will likely have to move investments as the DeFi Space matures and new options influence the market (Cardano, Matic, Eth2.0). This is less about perfectly timing the market (cause that’s impossible) and more about following the higher APR’s around that are founded in coins you have decided you can somewhat trust.
#6 More adoption in DeFi likely equals lower APR’s but more security… this may be the last year this is possible - Who knows?!?
#7 Learn how to use Bridges, transfers, transactions…etc. Really, Really Well. There are countless complaints out there of failed transactions, screwed up transfers, cash outs timing out….etc. I have actually had almost no issues but you have to learn how to up your gas fee during massive SHIB selloffs (from like 12 cents to 35 cents). You have to understand how to bridge ERC20 tokens back and forth to the Binance Smart Chain using tools like MetaMask (this seems overwhelmingly hard at first but is actually easy…. Watch a YouTube tutorial). You need to make an excel sheet to track for taxes… and on and on…. There will always be something that 1M people are freaking out about on why this stuff is Hard but really it just takes a bit of research and then you realize it is pretty simple and works pretty well… The risks remain though… Never invest money you can’t afford to lose.
THE RESULTS SO FAR:
1.5 Months in - I have easily maintained between 114% - 119% APR so I am ahead of schedule on interest earnings. I am make more on Staking than I do on my salary. I have more than doubled my income for the last month.
One thing to Understand is if you aren't in the position to let all that money ride and actually need more monthly passive income... instead of compounding your earnings you could cash them out monthly ( after doing daily compounding) and you would still achieve a ~50%+ bonus on top of your annual income.
If you like this… I will get Monthly updates out on progress and moves. Hopefully this was helpful to someone that also understands the risks. Thanks for being a great community.