- DRIP Network is arguably one of the most controversial
projects in defi today
where the only way new investors can enter
is through an already existing investors' referral link.
WIn coming across this project over three months ago,
that is one of the reasons why I immediately shot it down.
However had I invested, I could have made tens of thousands
of dollars by now.
Per one of the anonymous founders,
it was created to be first truly sustainable
decentralized platform that pays out daily ROI
of passive income to its investors.
However, is that really the case
or is this just another defi pyramid scheme
that's waiting to crumble on the next market pullback?
And today I'm not only going to be answering those questions
but we're going to be looking at the pros
and cons of the DRIP Network as well.
By the end of the video you should get a feel for
if this project is right for you or not.
Let's dive in.
(funky music)
What's up guys, my name is Kris,
and on this channel. I talk about different ways
I'm making passive income online
and I'm not personally invested in the DRIP Network
but this is by far one of my most requested videos.
Not only is this video going to encompass everything
there is to know about the DRIP Network
but I'm also going to be touching on
how investors are multiplying their DRIP investment
using a layer two protocol called the Animal Farm.
And like I said by the end of this video you should know
whether or not this project is right for you.
But before we get into it if you could just do me a favor
and drip your thumb or mouse down to the like button
on this video, it really helps the video out.
And while you're down there consider subscribing
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DRIP Network is a defi project that launched
on the Binance smart chain in April of 2021.
And it's currently sitting at just
under a $100 million market cap
and it has a small token supply of one million tokens.
This project was created by two anonymous founders
with the alias Forex Shark.
And essentially what happens here is the user
will purchase DRIP tokens either from PancakeSwap
or the DRIP website, and then enter those DRIP tokens
into a Faucet contract to receive a daily ROI of 1%
with a max ROI of 365%.
The key thing here is is that that's in DRIP tokens,
not in USD.
The 1% daily DRIP can either be withdrawn
or manually compounded which the white paper calls hydrating
to further compound an investor's results.
And the only way to access this Faucet contract
is to use an already existing investor's affiliate link.
And when an investor puts their DRIP
into this Faucet contract, two things happen here.
Once the DRIP tokens are burned,
this means that the tokens are no longer accessible
by that investor or so their investment is gone.
Number two is this creates a deflationary type feature where
the total supply is going down and the utility is going up
by the DRIP tokens entering in the Faucet contract.
Another important part of this protocol
is the referral system.
So once the user has someone use their link
and it holds the BR34P token,
that user then can receive a 10% reward
and the amount of that reward and how far down the pyramid
or downline as they call it,
you can receive the rewards depends on
the amount of BR34P token that you're holding.
And I'm not going to go into the exact details on this
but I have a link down to the white paper of DRIP
so you can see the exact breakdown of that
if you are curious.
Now let's discuss the token economics or tokenomics
behind the DRIP ecosystem that allows investors to receive
that daily DRIP reward.
And this is all possible by several taxable events
that incur across the lifetime of an investor
inside of the DRIP project.
So there's a 10% fee on selling your DRIP into B and B.
There's a 10% tax to deposit it into the Faucet contract.
There's a 10% to claim out the DRIP
from the Faucet contract.
And then there's 5% tax each time you hydrate
or compound your DRIP.
And there is an additional whale tax as well
which I think for most people is going to
end up benefiting them
and where you have over one million DRIP
you get taxed 10% all the way up to 10 million DRIP,
which is a 50% tax.
So that's definitely a pretty hefty tax.
Now, is this a pyramid scheme?
So in the court of law would a judge determine this
as a pyramid scheme based on what a pyramid scheme is?
And I'm going to say no.
And the founder of DRIP did an interview
which I'll leave a link in the description below
where he gets asked this question
and he compares the DRIP referral system
to that of an Amazon affiliate link.
Whereas most pyramid schemes
when someone ends up entering in that project,
the funds from that person will then be distributed
to multiple people.
Whereas if you use my Amazon affiliate link
and I get a commission for it, that's just going to me.
And the same is being said here.
So when someone enters in the DRIP Network,
only one person actually gets those rewards.
And most often in a traditional pyramid scheme
earlier investors get paid more rewards
than the people who get in later on.
Whereas in DRIP if you refer out five or more people
you actually end up making 20% less than they do.
And there are many businesses out here
that have been successful for decades that survive off
this multilevel marketing style type business.
And I'm personally not a fan of those.
And that might be a personal bias from myself
but don't let that persuade you
from getting into this project.
However, this is just one part of the protocol
and in early February of 2022
the founders created the Animal Farm
which is a layer two protocol which claims to be
the first deflationary yield farm protocol
that allows investors to add DRIP
and buy in at stable point to avoid a 10% transaction fee.
So in theory as long as the price of DRIP
isn't drastically increasing or decreasing
most DRIP investors would want to get into the Animal Farm
to maximize their results.
But how exactly does this work?
Well there's a DRIP liberation contract on Animal Farm
that offers investors a 3% daily return.
And really quick, I do wanna say that there's more
to Animal Farm than just DRIP.
And I did a video talking about how I'm personally invested
in some of those other parts of the Animal Farm.
And I'll leave a link down to that below.
But for this video we're just sticking to DRIP Network.
Now the DRIP liberation contract enables
that you to liberate your DRIP with BUSD
and then you receive LP tokens.
And once you get at those LP tokens
you can then go into the DRIP garden.
You use those to buy plants.
Now, once you buy those seeds, similar to how you buy DRIP,
you'll never see that money back.
And they have a graph on their site that shows how
where in most contracts like this
people who get in earlier get paid out more.
However, in this type of contract
the investors that get in later are actually
the ones who get paid the higher return.
And they say this is sustainable,
but I'm going to tell you right now
that this is not going to be sustainable
because if you were to invest $1,000 right now
at a 3% daily return that is $2.6 million in a year's time
according to the compound interest calculator.
So it's just not feasible.
So this is still really, really new.
All of this, the DRIP garden, the DRIP Network,
is all hinged on the fact of new people
entering the project.
And you can see on the block scan
that there are 73,000 different wallet addresses
for the DRIP Network, and who really knows how many
of those are actually the same people.
But oftentimes in the community
I've seen people compare DRIP Network to that of Hex
or SafeMoon and SafeMoon has a market cap of $1.2 billion
and Hex right now is a market cap of over $27 billion.
However, I'm going to share with you why I don't think
that it's going to get there.
The first difference between Hex and SafeMoon
versus the DRIP Network is
is that the founders of those previous two projects
are not anonymous.
And I know that there are quite a few crypto projects
that do have anonymous founders, but projects like this
I think it's really imperative that the founders
dox themselves given the nature of how sketchy MLMs can be.
And let's also look at Hex, right?
Hex has a market cap of over 270 times that
of the DRIP Network.
However when going to the block scan
we can see that there are only 284,000 Hex wallets.
Maybe that the market cap is 270,000 times bigger
but they're only four times the amount of wallet holders.
So I think that DRIP is definitely fighting a battle here.
One other thing that I wanted to fit in here
that's bullish about the project is that they're working
with an ERC 20 NFT platform, similar to that of Open C.
I mean, it could be Open C,
to apparently add utility to all types of NFTs.
And I really don't know what that's going to entail
but we should know more in the coming months.
Now did I decide to invest in the DRIP Network?
And my answer is no, I still decided not to invest in it.
And my reason being is is that these high APY
defi projects are risky.
And although I am investing in some
I only have a certain amount of my funds that I'm allocating
for high risk plays like this.
And I went ahead and I chose some other projects over DRIP.
It's a combination of a few things of why I didn't invest,
some of that being that the founders weren't doxxed
paired with the fact that it's
a multi-level of marketing type business.
And lastly it has such a high tax feature
which in my opinion defeats the whole purpose
of what crypto was aimed to do when it initially started.
So I'm not investing in DRIP
but don't let my own personal decision affect you.
Check out the white paper which I have linked down below.
And in my next couple of videos
I'll be talking about projects that I decided
to actually invest in.
And if you did like this video,
consider liking and subscribing for new videos coming out
every single week and also check out my playlist.
You'd be surprised at how far one video a day
can actually go.
Stay safe out there guys.
Thanks for watching and I'll see you next time.