Diamond Hands and DeFi

Hold on for better returns

There are several wise old sayings in crypto; which is unusual for an asset class that is scarcely more than a decade old. Long-term cryptophiles will tell you to “HODL”, an accidental typo for “HOLD” from 2010 which was initially mocked and then became an homage (see also “pwned” instead of “owned” in gamer’s parlance).

According to the Redditt investors, weak hands cannot HODL (or hold) their crypto when markets drop. Weak people lose faith and sell, often for a loss, and can then miss out when crypto prices rocket back up. Those with steel or diamond hands are strong enough to hold through the dips, which may see drops as much as 50-80% from their all-time highs (ATH).

Some investors will take pride in their diamond hands: holding investments that may have dropped by up to 90%. Braver investors will accumulate more coins when prices crater, as they see more value and ignore the fear.

In the past few weeks, most crypto prices have trended down, due to a plethora of bad news from Elon Musk, the Chinese government and other influential sources.

There has been some good news, with the government of El Salvador eschewing the USD to adopt Bitcoin as a reserve currency. This world-changing move includes ripple effects of positivity, as the El Salvadorean government would be selling millions of USD (driving the price of USD down) and buying boatloads of BTC, increasing the price of crypto’s grandpa.

On its own, either action could increase the price of crypto; taken together, it is a perfect storm. Oh, and did we mention that the ES government is gifting $30 worth of Bitcoin to every adult citizen in El Salvador, to increase mass adoption and usage? That’s a stimulus package we can support! Whilst $30 may be a couple of coffees and a Happy Meal in some countries, in El Salvador, where the average wage can be just $7000pa, a $30 gift of BTC is a decent incentive to open a crypto wallet.

Stay tuned, as the El Salvadorean experiment is being closely watched by Paraguay, Mexico, Colombia and several other countries who tire of the Fed manipulating the USD and adversely affecting their economies. One country rejecting the heretofore sacrosanct USD is an anomaly, two or three countries will be the next set of dominoes falling in a chain reaction that will change the world as we have known it since the creation of the Fed in 1913.

Hang on in there!

Sometimes all you can do is hold on; then we made DeFi rewards

For those who have valiantly held their crypto through a few of the previous boom and bust cycles, sometimes it took a lot of strength and patience. The rewards often came several months or years later, when 50% drops were followed by 1000+% gains.

There were no short-term rewards in a downed crypto market, until the invention of DeFi, or Decentralised Finance. Sophisticated investors will always want to borrow money for investing and trading, and previously the monopoly on lending was held by banks.

Banks have a reputation for looking after shareholders and shafting their customers. Most people think that banks make a reasonable profit by lending out $100 000 at 8% and paying 1-2% interest on deposits. Most people do not understand Fractional Reserve Banking (FRB).

Normal banking allows a bank to take your $100 000 deposit and pay you 1% or $1000. FRB allows a bank to lend out $1 000 000 (ten times the cash it has on hand) at 8% and earn $80 000 for every $1000 it pays back.

A ratio of lending out $10-12 for every single dollar on deposit sounds extremely dangerous, but it worked for many centuries. The weakness of banks and the devastation of the GFC only came about because some banks had ratcheted up the sacred 12:1 ratio by up to sixty times.

We do not claim to be smarter than the chairman of the Federal Reserve, but we figure if an economic ratio has worked for around 800 years, it is unwise to mess with it. Throughout recessions, depressions, wars, changes of empires, kingdoms and governments, FRB worked for almost a millennium; until greedy banksters screwed with the formula. To maximise revenue and pay themselves huge bonuses, the near-sighted fools created their own destruction, and almost destroyed the entire global economy.

Not all banks are evil, and we will always need a system to serve both borrowers and lenders. It was a corrupt elite who greedily screwed the system for their own gain, which culminated in the GFC. The GFC gave rise to Bitcoin and crypto as a new type of “un-manipulatable” money; created for the people by the people. The advent of DeFi gives us a new type of transparent banking, where borrowers happily pay a reasonable amount of interest, and lenders receive up to 80% of the lending revenue, rather than one-tenth of 1%.

Rather than just HODL-ing through the market dips, investors with diamond hands can be rewarded each week or month with interest rates of 6%, 10% and sometimes higher. When you realise DeFi can host stable coins which are valued at 1:1 with USD, AUD, HKD, GBP, and compare the rates to your local bank, it is easy to understand why billions of dollars each month are flowing out of traditional banks and into DeFi.

There will always be crypto detractors and bad news, as bad news sells more ad space than good news. It may take a little searching to find the good news, such as increasing crypto market stability, nationwide adoption in emerging economies, and less volatility with increased DeFi holdings. Keep holding your crypto, and accumulate more during dips if you can. Keep seeking the good news and question the narrative of nay-sayers. Sometimes rogue operators manipulate the markets for their own gain, so be aware. Stay strong, diamond hands.


How did we go this month?

In the last few weeks, whilst Bitcoin dropped over 50%, Bostoncoin only retreated by a smidge over 10%. This is the result of a “3-D” strategy: Diversification, DeFi and Diamond hands.

We diversify for safety: investing into a variety of projects which do not necessarily drop when Bitcoin drops. We use DeFi to earn interest on many of our holdings, to smooth out the dips. We hold strongly to good projects, like a dog with a ball, and accumulate more when appropriate.

This month: Bostoncoin down 10%, but up 400% for the year

DeFi darling Celsius continues to dominate with over 10 000% gains since we started with them. If you have not yet seen the video, visit our Youtube channel for our profile on Celsius as well as other ICO and CEO interviews.

Blockchain agnostic oracle ChainLINK is up over 1000% and a few more winners abound, even as BTC temporarily went down by half. We anticipate big bounces as more governments discover in 2021 what billionaires discovered in 2020, and nerds discovered in 2010: crypto is the future.

CEL up 13 293%

LINK up 1579%

XYO up 1344%

EGLD up 427%

BAT up 201%

BOS NAV at 30/06/2021


BOS price 151.023016

MOM down 10.5%

YOY up 470.07%