- Now look, we need to have a talk.
- But two seconds off you no way.
That garbage sitting in there overflowing,
you ain't done none of your chores.
Now you're coming here talking about, yeah
- No, not that talk, but about crypto passive income.
The market's getting pretty grim.
Projects are collapsing on themselves left and right
and there is a possibility that we're just getting started.
And while all of this is going on,
some of you are still looking for those defi gems
for a crypto passive income that toe the line
between two risky and just risky enough only to be days away
from recouping your original investment to get rugged
by the founding team.
And that's exactly why I'm making this video
because making money in defi
is drastically different in a recession
let alone the possibility that we go into a depression.
So getting inspiration from one
of my favorite stories of all time, the Christmas Carol
when the main character Ebenezer Scrooge, gets visited
by the Christmas spirits of past, present, and future,
we too are going to go on a similar journey,
but this time with crypto.
We're going to be looking at three past projects
that have previously rug pulled
including Terra Luna, yield nodes, and stable funds.
And we're not only going to be looking at the warning signs
but what the aftermath of these rug pulls look like.
Then we're going to be moving on to the present
looking at our portfolios, and then setting our eyes
to the future on how to best prepare for the next bull run
while simultaneously preparing for if things get worse.
So whether you're just getting started with crypto,
you're a seasoned veteran or you're somewhere in the middle
as a casual investor that is constantly losing money
this video is for you.
So settle in, grab a drink, hit that like button
maybe subscribe too while you're at it
and let's get into it.
First we need to travel back to the beginning of 2021.
It's six months after the Bitcoin halving,
crypto's future is brighter than ever.
Bitcoin is sitting around 35K
and it's yet to make its push up to $60,000.
But more importantly, the entire crypto market is sitting
at just over a half a trillion dollars.
And in the next year, it's going to make a run up
to almost $3 trillion or over six times of where it's at.
And this means anything tied to crypto
in even the smallest way is going to explode.
New projects, old projects, NFTs, and especially Defi.
And let's define Defi because what it was at the start
of this timeline is drastically different to what it is now.
Defi or decentralized finance
is exactly what it sounds like.
It removes the controller power away
from institutions such as banks and other third parties
and it transfers that back over to individual investors.
And not only do Defi participants have more control,
but there's also a transparency
on the blockchain that shows everything.
And most importantly, it offers a variety
of different ways through making money.
And that could be through master noding, crypto lending,
crypto staking, and a variety of other ways.
And this is how Defi started.
But like anything, it evolves over time.
Whereas before you could buy a crypto that had a utility
and a purpose and then stake that crypto
on an exchange and earn interest
from that token for liquidity purposes or lending.
But new institutions started to arise in 2019 and 2020.
And some of these projects are Strong Block,
Drip Network, Yield Nodes.
And even though some of these claim not to be defi,
they were still using defi mechanisms
to make money for their investors.
And even though all of these institutions
have different goals and individuals
in the companies, they all have one thing in common
and it's that they're centralized institutions
that are taking control of people's money.
The ironic part is is this is exactly
what Defi was trying to prevent.
So if you want to participate in some of these protocols
you have to forego your rights of your crypto or your money
for an extended period of time, sometimes indefinitely.
However, unlike these centralized banks
and institutions that are held up by strict guidelines
by the FTC to prevent fraud and other scandalous activities,
these crypto institutions are not.
And at the end of the day, this leaves us trusting our money
in the hands of strangers that have no accountability.
So what could go wrong here?
Rug pulls.
Let's look at three projects that I mentioned earlier
Terra Luna, Yield Nodes, and Stable Funds.
Now, I wouldn't get too caught up on their names.
Even though these three projects are pretty much done
and I'll explain why I say pretty much here in a minute.
These names are just placeholders.
There will be new projects
and new devs that enter the space that are going
to do the same thing these guys did.
So it's important to not take their names too literally
and understand the mechanisms
of the why as to what happened here.
Let's look at the project Stable Fund,
it's the easiest to spot.
It's using trading bots to pay out its investors 1% per day.
And now while a return like this is more
than sustainable in a bull market,
in early 2021 the crypto market was about to increase
by almost $2.5 trillion.
So not only is there a shortage of capital
but there isn't going to be a shortage
of new buyers as well.
We're not in a bull market right now.
We're in a bear market.
And it doesn't take a genius to really see
that something like this isn't sustainable.
But what about these projects that are paying
out 1% per day in a token and not actual money?
Well, if they continue this for an extended period of time
the token price is just going to decrease.
An example of a project
like this happening right now is Drip Network.
Look at this chart.
Yes, they're paying out 1% per day
but it's in a token that is steadily decreasing.
So I don't really understand the argument here
but spotting something like that is relatively easy.
I would believe that most people who get
into those types of projects understand
that it's basically degenerate gambling.
What about these projects
that are paying a much lower return?
Like Yield Nodes was paying 5% per month
or UST was paying 20% per year.
And what if the entire team was doxed,
and furthermore, if they had been doing this for years?
Both of these projects collapsed on themselves
and Yield Nodes specifically did audits twice
per year and just 12 weeks before their announcement
they were 30% over collateralized
meaning they could pay back all
of their funds and still have 30% left over,
and 12 weeks later they're announcing
that they've lost over 90% of their funds.
How can this be explained?
Well, as I stated, these projects go
against the very essence of why Defi was built.
Whether you're claiming to be defi or not
that's beyond the point.
If you have an element of defi in your project,
you are in the defi space and these centralized institutions
that are investing your funds have no accountability.
And this leads to funds being misused.
Specifically with Terra Luna
there's proof here with Yield Nodes, there is not
but they haven't proved otherwise either.
But both Terra Luna
and Yield Nodes are both trying to salvage their name
or what's left by promising
their investors new business plans.
And since the Terra Luna crash in early May
people have been reporting weekly updates
on the projects, sometimes even daily.
People genuinely think
that these projects have a shot at rebuilding.
Yield Nodes, for example, is planning on investing
in real assets including nuclear reactors that are
promising a 5% quarterly return.
So it's not even a defi project anymore.
But my point is, is that anytime something
like this happens, your money is gone.
And I say that being an investor in one
of these projects because there has not been an instance
of a project rebuilding after a crash like this.
And until a project does do that, the burden
of proof is on them to prove to us that they can do it.
But the biggest reason why I think investors
should just write the money off
it's because worrying or hoping
that you get your money back is the biggest danger of all.
And that's because it's wasted energy
and it's detracting away from your present mental focus
where you could find other ways to make money
or other crypto projects to potentially get in.
Our present day portfolios.
Let's be clear, I'm a believer that
if you don't have some losses under your belt, either one
you're not pushing the envelope hard enough
and you're not taking enough risks.
Or number two, you just haven't been
in the crypto space long enough.
And on the other end of the spectrum
if two out of every three projects you're investing in
are collapsing, then you probably need to
reevaluate your investing strategy.
So where is that middle line exactly?
And the answer to that question is going to be dependent
upon the time in which you're investing.
Yield Nodes was really the last centralized project
that I was in.
I really pulled out a lot
of my investments starting in late March to early April.
So whether you like Floyd Mayweather or not,
one thing the guy did do right
was he picked battles that he thought he could win.
And you can see this across many other industries.
For example, Nicolas Cage
there was one point where he was taking
on every single role that got tossed his way,
but in his olden years
he's been much more selective with the movies he makes.
And he's been making some pretty great movies lately, guys.
But my point is as any type of investor
we too are faced with these same battles
and now is not the time to be getting into these projects.
This level of risk has tilted, whereas before
in the bull market where a few hundred percent
per year wasn't that risky.
Now 5% per month, even 30 to 40% per year
is possibly too risky.
So I think it's okay to still invest in these
but just understand the level
of risk in which you're getting getting in.
And if over 25% of your portfolio
are these centralized projects
that are offering anything over a 50% return per year
you should probably consider reevaluating your portfolio
and understand that if things get worse
you're probably going to lose more money.
Now, what I'm doing instead is I'm looking
at projects that actually have utility that have decreased
by about 80 to 85% from their all time highs.
And I'm dollar cost averaging in there.
And that's great because if these projects do make it
out of the bull run, they have the chance to 4, 5, 10
maybe even 20x some of 'em.
But that's only going to take you so far.
So how do we hedge for a bull run or a possible depression?
Some of you may be saying, Chris
why are you even talking about a depression?
A depression is just a recession that lasts longer
than three years.
So technically that would mean being
in a recession until around 2025.
I'm not saying it's likely, but as an investor
we have to account for every possibility.
And there are some very credible financial analysts
out there saying that this is
unlike any recession they have seen, including the 2008 one.
So what can we do?
The first thing I'm doing is I'm staying away
from any defi or centralized institution where
their sole purpose is just investing your funds.
If they do not have any kind
of outside utility on top of that, I'm staying away.
As we've seen, the risk right now is incredibly high.
They could be doing these in-person audits
two times a year, but at the end of the day
we know that there's nothing holding them accountable
from running off with all of our funds.
But there are two conditions where
I will make exceptions to this rule.
Before I get to those exceptions, I would like to announce
that I'm launching a company called Better Blockchain,
a company designed to make the entire blockchain
space better by asking the developers
of some of these projects critical questions.
What are your revenue streams?
Why aren't you doxed?
What problems are you trying to solve?
Who are the biggest competitors in the space?
Who are your partnerships?
And I'm making this company
because I feel like the space is lacking this.
I wanna make it
to where these developers are actually getting grilled
with hard hitting questions to where even
if someone is trying something even remotely shady
they're not going to want to come on.
I'll be doing all of this on YouTube.
I'll leave a link down below to the website
betterblockchain.net as well as the YouTube channel.
Live AMAs will be starting some time late this week.
Well, what are my two exceptions
on investing in some of these higher risk protocols?
Number one is if there is a product
or business that's being built that actually has utility.
And I think of this more as angel investing
which I'm completely okay with.
And number two is I'll start investing
in some of these higher risk protocols once we
start seeing some significant recovery in the market.
I put this here because you can make a lot
of money in some of these higher risk protocols.
For example, there were people who invested in Strong Block
in early 2021 and they ended up quitting their jobs.
So I don't want to write them off completely
but until we see the market recover
it's the same trading analogy
as trying to catch the falling knife.
You should never do that, wait for it to go back up.
But in the meantime, I'm really heavily focusing
on ways outside of crypto to make money.
And some people in the crypto space say, Hey Chris
I don't have time to learn side hustles
or find other ways to make money.
One thing I ask is, let's just be real with ourselves.
That's just an excuse because at the end of the day
we make time for what we feel important.
But what I would argue, it's not that you don't have time
it's that you don't believe that there's anything worthwhile
of creating or learning how to create.
So to change that belief
I recommend checking out this video right here
to learn some extra ways to make some side income
or even create businesses that will generate
you income every single month.