Decentralization is THE crown jewel that blockchain has. Otherwise, you can do almost everything that crypto does with an Excel spreadsheet, and at a fraction of the price
Once we lose decentralization it rarely (if ever) recovers
4/ Reason 2: Sunk-Cost Fallacy
Big projects occasionally come across some obstacle that they can’t defeat
Leaders make it a point of pride to overcome them and waste a lot of effort on these crusades. This often leads them to overcommit and put what they’ve built in jeopardy
5/ Napoleon in Russia
If I sense Cardano has entered into a huge fight it can’t possibly win, while throwing good money after bad, trying to win the war, I’ll exit
For example, if Cardano antagonizes China over data management solutions in Africa
6/ Reason 3: Change in Culture
Cardano is one of the few projects that understand that Rome wasn’t built in a day. It’s a painstakingly long process that needs care and deliberation at every step.
If the community values short term gains over results & tech, that’s a red flag!
7/ Reason 4: Token Shenanigans
I don’t want things like token burning, “taxes” designed to limit transaction numbers or sales, punishing lockup periods or any sneaky token sleight of hand to pump up the TVL (looking at you Luna)
If Cardano starts with any such nonsense, I’m out
8/ Why token shenanigans are bad
These are all measures meant to artificially increase the token price, or stop it from falling too much.
If ADA wants any hope of becoming a widely accepted currency, then it must not impose artificial boundaries on people’s transactions
9/ Reason 5: It Becomes Overly Political
A recent trend, especially in Catalyst proposals, is to make measures overly political statements instead of focusing on utility and practicality
If this becomes normal, it will result in infighting which will constantly undercut Cardano
10/ Reason 6: IOHK doesn’t relinquish the crown
IOHK calls the shots but they’re supposed to let go of the reins and let the community take charge in the near future
If this doesn’t happen within the next few years, it’s a cause for some concern
11/Reason 7: Institutions gain control of Cardano
Whether it’s huge financial players taking a dominant ADA stake, or outright buying critical Cardano infrastructure, it’s not good news
Since we’re not their shareholders, we’re seen as disposable and exploitable resources
12/Reason 8: Something better appears
In a space as fast-moving as crypto, there may be something that is objectively better and more exciting than Cardano
Cardano's code and research are open source after all, and thus competitors can learn lessons without incurring great cost
13/ Reason 9: Regulatory and tax landscape makes it impossible to hold
I won’t risk jail or incur tremendous costs when dealing with my investments. So while perhaps the protocols would survive, I’ll take the coward’s way out and not have to deal with severe punishments.
14/ Reason 10: I hit my price targets
I might not sell everything, but if 2/3 of my portfolio can produce a high enough dividend yield when put into a boring broad stock market index to be able to support me, I’ll sell 66% of my portfolio, and leave the other third riding on ADA
15/Taking Profits
I don’t believe in bagholding to the moon. If you’ve hit your targets, take profits, even if we’ve barely left the stratosphere
Remember crypto is VERY speculative
Index funds will protect your wealth, and give an expected yearly ROI of 8% with 3% dividends
16/Conclusion
Cardano is an investment, not a religion. I’m willing to sell if there’s enough cause to do so
Don’t let others pressure you into keeping something you’re no longer comfortable with. But don’t sell in the face of every bad news
Know the worth of your investments!
17/Addendum
To borrow a phrase by the Poet John Keats, these investment rules are “writ in water.”
There may be mitigating circumstances if/when these circumstances occur, but they will serve as major red flags for me to consider whether I ought to finally sell.
18/Shilling
If you liked this, please consider giving a follow. I write one large thread a week, which looks at crypto from a completely different POV
I then convert these threads to full-blown articles with greater depth and evidence on Medium
Sitting Tight - February 2022 Crypto On-Chain Digest
This report is an analysis of various on-chain metrics for #Bitcoin, #Ethereum and #Cardano which show a bearish trend for the markets and what its ongoing effects might be 0/6
Most important info 1/X
Throughout February, Crypto was going out of exchanges, which would imply people intended to HODL. Now though, exchanges are minorly receiving more crypto than is leaving, so people are more likely to sell their holdings. However, this trend is lessening with each passing day 2/X
Over 90% of my net worth is in ADA at the time of writing. I believe in the project enough to more or less work full-time on it.
That said, I believe anyone that invests in an asset should be able to play devil’s advocate against it if they really understand it.
2⃣ASS COVERING
I am going to be uncharitable in my assessment of both Cardano and its community. I don’t do this out of malice, but out of an attempt to temper some of the over-optimism native to Twitter that I’m sure has led people to overleverage and go bankrupt
1/ Inspired by @cardano_whale 's post, I shall also make a prediction's thread but I will make them different than his, although everything he said is very reasonable.
[I - Real Use Cases]
2/A criticism thrown at #crypto is that it caters to speculators instead of users
In 2022, a major and easy to implement use case is that of microfinancing, by tying the degens looking for yield with those in underdeveloped markets who need microloans.
[II - Institutional Adoption]
3/ #Cardano is not the first name that comes to mind when the average person thinks crypto.
So even though 2021 marked the first wave of institutional adoption in crypto, major corporate investors will arrive en masse in 2022 as $ADA proves itself
1/ As people start working for DAOs, and get paid in their tokens, the nature of economic cycles will change
If my neighbour gets paid in EUR, or even $ETH, and I get paid in $ADA, then I have more in common with someone in Japan who gets paid in $ADA than with my neighbour
2/ Put simply, if enough people get paid in a non-local currency, the nature of recessions changes.
If someone is in an ecosystem that is doing well, their newfound wealth counterbalances the people who are doing poorly. So crashes in the economy are thus much milder.
3/ The key thing though is that #crypto markets have to decouple from #BTC so that projects can succeed or fail on their own merits, rather than the whims of their decrepit grandpa
Not only that, but Decentralized Autonomous Organizations (DAOs) must rival LLCs as employers
1/ Following the recent conversation I saw with @cardano_whale and @TheCryptoviser regarding whether token burning makes sense, I've decided to wear my economist hat and take a stab at it.
[A THREAD ON TOKEN BURNING]
2/ WHY TOKEN BURN AT ALL?
The argument goes that token burning is good for current holders as it reduces the overall supply of the asset in circulation, which assuming everything else remains equal, pushes the price up due to the law of supply and demand.
3/HOW DOES IT WORK IN ECON TERMS
Token burning is deflation, as you're reducing the overall number of a currency in circulation and thereby raising the price.
The problem though is that this stops activity (if you think a $1000 TV will be worth $900 tomorrow, you'll wait)