Thread by @wilxlee

"Passive Income" = LOSE ALL YOUR 💰
heres WHY 🧵👇

with every project coming up with a $token giving hopes to the promise land of passive income..

is this REALLY the truth? what do YOU need to be aware of? what would wipe your wallet?
what to hold to truly take advantage of this #defi+#nft movement? 👇

0.1 the start

the genesis of this is started by @CyberKongz with their 10 $banana yield/day for 10 days.

current price of nanas, ~$72 = $720/day ~$260k/yr.
not too shabby for holding an jpeg.

this is what really inspired the current movement of projects, all coming up with a $token, giving yield/passive income to holders. many of which, give +x100% ROI/year.

credit: @NathanCRoth

1. securities

the biggest risk of holding these #nfts is that any vehicles with promise of returns (royalties/sales/commission) is deemed a security from the govnt stand point.

which means, there will be a lot of regulations to go along with it.

simply put, we don't want that.

thats why LEGIT projects would consult with lawyers to ensure that they position themselves WELL away from the blurry line.

what makes sth a security?
more info: howey's test
investopedia.com/terms/h/howey-…

this is where the @dao_turtles messed up, promising returns explicitly, falling into the definition of a security, which lead to @opensea delisting them

in the case with @CyberKongz
they state clearly =

1 $banana = 1 $banana
there is no economic value in them
it is not an investment

nanas are purely a CK token for the ecosystem, with governance and such.

so where does the value come from?
it is up to the community/users to give it value. nth stops us from trading these $banana with each other OTC and thats why there is a market place for it.

so what gives the $token value?

2. utility

we hear utility a lot. what does that mean.
that means what the hell can you do with your hard earned $tokens...?

the devs must design a positive feedback loop to keep "players" aka u, coming back again and again to use the $tokens

ie. @CyberKongz game loop atm:

u generated 10 $banana per day holding a genesis. in 60 days, you earn 600 nanas.
with 600 nanas, u can breed it into
1. a baby kong (floor - 10.5E) and
2. a kong vx (floor - 1.6E)

thus users now give value to the $token if they want to breed

what a lot of projects are doing now, is just copying one another, with no real thought or innovative as to HOW to keep users playing.

what happens when the music stops?
whose holding the big old bag of NOTHING?

$token can be worth $100/per, but if no one is willing to buy it at that price b/c no one is playing/believing anymore... then you fuked with 10,000 $token....

which is what ppl mean when there is no liquidity.

3. tokenomics

so ur project has utility, isn't a security, does it mean its good to go? don't think so.

here is a big one that 99% will fail in.
tokenomics.

tokenomics is simply the economy (supply/demand) within the project.

ie. IRL - a country needs to balance their own economy by printing more money or buying back more $ to counter inflation or to encourage growth

just typing that out, makes me scared.

how the hell do you expect ppl running these dickbutt, toadz, owl, dog, cat jpegs projects to understand the mechanics in developing a full fledged economy within their ecosystem?!?!?

and you talking abt generational wealth?
wake up please.

ie. back to our prime example @CyberKongz. currently, there is breeding - which offsets it super well. but what happens after the breeding? (~1000 babies left to breed)

dune.xyz/masroor/CyberK…

even with all the brightest minds in the industry building this project. they are going to be fighting to offset 10k nana production everyday. there will be @TheSandboxGame utility happening in dec which is around the same time as breeding should be completed.

but what if:
1. users don't find value in this new model?
2. @TheSandboxGame launching delayed?

whats going to offset, this HUGE supply?
if nth - then supply goes up, demand does down = $ goes down.

which is why there is the KongzTank is such a BIG brain idea. to grant devs and other projects to utilitize $banana which will act as a hedge to those unforeseen situations. if alls good, then $banana will be mooning with such a shortage.

so - the project that yields $2k a mth for you now. what is their tokenomics? what if breeding is over? what keeps ppl coming back?

if you can't answer that, most likely, the founders haven't figured it out either and we are all playing a big game of musical chairs..

Final Thoughts:
all in all - not telling you to stay away from them.
these projects are fun and exciting.
most, will fail and crash.
few, WILL provide generational wealth.
thats why the return is so no brainer.
as cliche as it sounds:
high risk = high reward

whats my play?

just don't be the last person to hold the bag.
which means - you just need to be one step ahead of others.

how?
make sure you like/retweet this.
thats how 🤣🤣🤣
👇

🌟understand the projects game play and positive feedback loop
- this way you know when before the peak demand will be. (buy)
- you get to avoid the risky periods of "what now" after the peak demand. (sell)

🌟alpha: @AnonymiceNFT will be having their breeding soon. when breeding, mices can't be sold, no $cheeth will be generated. supply will be non existence, pushing up price. market will go nuts.

i foresee a +20E mice, which is when i plan sell.

🌟this is just one example of how i'd play this bag of mine. different strategies should be applied to different projects.
so if you still confused -
just follow me and ill share with you my thought process and moves...
+..so you can hold my bag 🤣🤣🤣

disclaimer: i hold passive yield too, each with different plays.
ie. @CyberKongz @U_UnicornsNFT @AnonymiceNFT and all the rest of the animals loll.
not financial advise.

ps: to create a $token is as simple as selecting a template on word doc...
pss: thats the reason why legit projects take their time with the $tokens... look at @coolcatsnft @BoredApeYC

psss: just for the record - by passive yield, i mean nfts that yields token. 1token = 1token. don't want my bags to get delisted... hahahha 😆