Thread by @shivsakhuja

There's a lot of hype today around #DeFi 2.0

Can't expect degens to ignore 500,000+% #APY..

If you're considering investing in protocols like $OHM, $TIME, $KLIMA, $SPA, $HEC then read on for some #hopium, warnings and a #spreadsheet to help you make the most of it.. 🪡 👇

2/ These DeFi 2.0 protocols offer enormous APY (Sometimes in the millions of %). Here are the current APYs of some projects:

- $OHM - 6,982.4% ($ETH)
- $TIME - 78,325.2% ($AVAX)
- $KLIMA - 59,722% ($MATIC)
- $SPA - 239,674.5% ($FTM)
- $HEC - 320,713.2% ($FTM)

Sound juicy? 🧃 🤑

3/ Here's a great video by @WhiteboardCryp1:


And another by @finematics:


I won't get into the mechanics of these protocols here, but I want to share a spreadsheet I created to help you understand the upside / downside.

4/

🧮 Some takeaways from the spreadsheet: bit.ly/ohm-calc

If you invest $1,000, here's how much you would have after:

- 1 mo: $ 1,388.46
- 3 mo: $ 2,676.73
- 6 mo: $ 7,164.86
- 9 mo: $ 19,178.38
- 12 mo: $ 54,221.53

(But only if $OHM price doesn't change!)

5/ Now let's binge drink some #hopium. What if the $OHM price went up 5x? 🙏

Your $1,000 would become:

- 1 mo: $ 2,942.32
- 3 mo: $ 9,383.63
- 6 mo: $ 31,824.32
- 9 mo: $ 91,891.92
- 12 mo: $ 267,107.66

Before you OD and pass out from the hopium, please keep reading. 👇

6/ Let's look at the downside scenarios from the spreadsheet. 📉

You'd breakeven even if the $OHM token price went down:

- After 1 mo - 27.98%
- After 3 mo - 62.64%
- After 6 mo - 86.04%
- After 9 mo - 94.79%
- After 12 mo - 98.16%

Not bad at all - so what's the catch?

7/ Reality Check:

1. In the spreadsheet, I used 5.4k% APY, which is much lower than the current rates, but even that won't last forever.

2. These protocols have a certain amount of #ponzinomics to them - they are only making money when everyone is bullish on them ☠️

Read on...

8/ Reality Check contd.. ☢️

3. When we have a true bear market, none of this will work. Everyone will pull out of $OHM and even the buybacks will not help much.

4. The treasury value / "floor price" can also drop hard if the market crashes as it contains assets like $ETH.

9/ Reality check contd..

5. Projects could always rug pull, leaving you holding a big bag of nothing. 🏴‍☠️

6. Can't forget the good old peg risk and smart contract risk that comes with every DeFi project:

https://twitter.com/shivsakhuja/status/1466384175921917953?s=20

#rugpull #cryptoscams #cryptorisks

10/ Now that I have scared you sufficiently, here's how I would play these protocols:

- Get a good entry price (very imp). Token price impacts the ROI a lot.

- Make sure the project / team is solid. Rug pull is def one of the biggest risks.

High APY crap is still #crap. 💩

11/

- Invest only what you can lose. Don't be greedy or you will get #rekt.

- #takeprofits regularly. Set a strategy and stick to it. A common one is to take out your principal when you double up. No one ever went broke taking profits.

12/ Also - don't use projects on #ethereum network unless you have a very large amount of capital. Gas fees will eat you alive. So no @OlympusDAO.

$AVAX / $FTM / $MATIC are good chains with low fees.

13/ Help a farmer out by liking / retweeting if you found this valuable. Be safe (🚜, 🚜) #defidegens

Here's a link to the spreadsheet again: bit.ly/ohm-calc

#DeFi, #OHM #OlympusDAO #DAO #OHMForks #Ponzis $DEFI $ALTS $ETH #RebaseProtocols

Pro tip: Use wrapped tokens to mitigate gas fees and tax bills.

https://twitter.com/shivsakhuja/status/1470238597068427269?s=20