Thread by @RealSilverRaven

1/ A practical guide to #Cosmos investing, staking, LP and more! A 🧵| 0/24

I’ve decided to write this practical guide for people new to the ecosystem, and people wondering where to put their money in the wondrous world of a (relatively) new 4th gen chain.

2/ What is #Cosmos - There’s plenty people who explained this very well before me. So instead of prolonging this thread unnecessarily, I’ll instead leave you in their capable hands. An example of such articles:

2.5 /
@_charlienoyes @danrobinson: paradigm.xyz/2021/04/a-cosm…

@wolf_of_defi

https://twitter.com/wolf_of_defi/status/1482808813531054085?s=21

@0xkrane

https://twitter.com/0xkrane/status/1478275681855455233?s=21

So now that hopefully you’ve been introduced to the ecosystem, let’s begin!

3/ Airdrops: One of the most valuable early wins you can catch are #airdrops. New projects running on ATOM or JUNO will want your liquidity to fund and fuel the early activities of the project. This doesn’t mean every airdrop will be a success, any dope can make an airdrop.

4/ In general, there’s very little downside to participating in airdrops, but please be careful. There WILL be scammers who will lead you astray with fake links. Projects that will rug or even try to maliciously get into your system. It’s important that you do your due diligence

4.5/ on any project you expose yourself to. Be careful with any link you click, and be EXTRA careful when linking your wallet to anything. Not sure what you’re doing? Let other people figure it out and pay attention to what they say before claiming your airdrop.

5/ When linking your wallet, ALWAYS take the time to read what the connection says it will do. Never do these things in haste, especially when you experience high FOMO due to a project launching or minting.

6/ To qualify for airdrops I recommend you stake $ATOM, $JUNO and $OSMO. These three pools have the most credence behind them. And most airdrops are distributed to those who stake any of or a combination of these three. You’ll miss out on some, but in general this is a good place

6.5/ to be. Make sure to vote on governance, as this can sometimes be a factor! Sometimes you need to (also) provide liquidity to qualify, more on this later.

7/ There will undoubtedly be more in the future, $SCRT for example has promised future airdrops, and looks like a very solid project. But I consider this one less ‘proven’ than Atom Juno and Osmo, and therefore slightly riskier. Again, just an example. Ask yourself if you believe

7.5/ in the fundamental value of a chain before staking it. If the answer is yes, consider airdrops a nice bonus.

8/ Staking: Staking has a nice catch-22 built in that when a coin becomes popular, staking it will yield lower rewards, but that’s okay, as it also means the price has likely gone up. If you stake, it’s highly recommended you compound your stake. I do this every month.

8.5/ Doing it every day might yield even better results if the fees remain low. But the difference is negligible enough between once per month and once per day that I’ve decided monthly is enough for me.

9/ To really drive this point home I recommend you make a sheet on google sheets and you brush up on your high-school math to manually calculate how much staking each project would gain for you, at different price points.

9.5/ I for example know that if I stake with my current mixture of assets for 1 year, I’ll break even if $ATOM drops as low as 9 dollars. This is valuable information!

10/ Right now I stake $ATOM, $JUNO and $OSMO, I’ve decided to liquidate most other assets I got through airdrops putting most of it into JUNO. The 120% APY won’t last forever, but it’s incredibly lucrative against a fundamentally sound asset.

10.5/ Again, this is a SPECULATIVE space, so take my words as relative. But if I had to pick a winner for 2022 it would be #JUNO.

11/ Once we have access to liquid staking it’s imperative that you trust the liquid staking protocol before you commit to it. This is the reason I don’t liquid stake on Solana yet.

11.5/ You’re reliant on the underlying smart contract to be sound, and I do not have that level of certainty yet. I’d rather eat a 24-day lockup (I’m committing for a year anyway) than a potential rug when a smart contract inevitably gets breached.

12/ Validators: Try to spread out your validators is the best advice, go for validators with a fee. My ratio is 2:1 - For each chain I’m on I pick two large validators within the top 15. And one outside of it.

12.5/ This is purely for the health of the chain as it decreases the chance of a 51% attack. And doesn’t give you much direct benefit. But indirectly you’re paving the way for the chain to be healthier. Which helps you.

13/ Liquidity Providing: Probably the poorest understood mechanism in Crypto. It’s important for liquidity to be provided for a project to remain healthy.

13.5/ It’s very cool we at the retail level can participate in something normally only AMM companies like FLOW traders get to participate in through the stock market.

14/ For most beginners I’m going to recommend against. Before you get into LP, you must fully understand how impermanent loss (IL) works. Research it, watch videos on it, read articles. Fully absorb what it is and how it can affect you providing liquidity. Once you do, go ahead.

15/ There are many incentivized pools right now, and many more will pop up on both JUNO and OSMO. The trick with LP isn’t to find insane APYs, because you’re likely stepping into a very illiquid space that’s very volatile. A cocktail that will get you burnt.

16/ Instead, if you’re going to be providing liquidity do so with fairly stable or correlated pairings. Examples of such pairings as of time of writing are: ATOM & OSMO, ATOM And $UST at least is stable on one end.

16.5/ I participate in both these LPs for now, but I’m keeping a very keen eye on developments and my finger on the trigger in case I don’t like the volatility.

17/ Trading: Last but not least, trading. Right now, I think we have far too little data to really pinpoint a good pair to trade. My recommendation is to use the above guide to get a good feel for the space.

Once you feel you’ve identified ranges, you’re comfortable with, you can start trading certain pairs. For now, the lack of solid trading tools makes this extra difficult. I’ll write a separate guide on this later.

18/ Remember: If it’s too good to be true, it probably is. Keep that in mind with everything you do in this space. Here are some general tips to stay safe:

19/ Use multiple wallets, especially when engaging in risky activities like giveaways or minting tokens. Mint them on a separate wallet. This increases your security exponentially.

20/ There will soon be 500 projects on $ATOM and it will be rife with scams, rug-pulls and vaporware. My strategy is to find the 5 project that are so rock solid, with a good team, clear value proposition and active development.

20.5/ On average the survival rate of coins on a new chain is about 1:100. Keep that in the back of your mind when apeing into anything.

21/ No one from any project will ask you for your recovery phrase or login details. Never give it out, ever.

22/ Use a ledger or a cold wallet in combination with your @keplrwallet wallet if you have one. Or at least for your #Keplr wallets that hold a lot of currency.

23/ Want to know who to follow? Here are some accounts that I follow, I believe these are knowledgeable voices and worthwhile accounts you should lend an ear to when you have the chance:

@ttk314 @OsmoSupportDao @sunnya97 @jack_zampolin @MapOfZones @CosmosProfessor @wolf_of_defi @0xkrane

24/ Can I ask for your help? Let people know about this guide if you think it can help them, give it a signal boost if you like, and hit me up with a follow if you like the content.