Turning $2K into $1.7MM with DeFi (Passive) Investing

Welcome to the DeFi universe & promises of +100,000% APY

There is a whole new world of finance emerging and it’s called DeFi. Although Decentralized Finance (DeFi) has been around for a few years now, with the recent success of Olympus DAO, there are new projects coming to the market offering extraordinary APY’s of 88,830% and more.

To put this into perspective, a $2,000 investment at an Annual Percentage Yield of 88,830% equates to just over $1.7 million dollars.

It sounds absolutely ludicrous, doesn’t it? So, let’s take a deeper dive into what DeFi is, these new initiatives and the insane APYs offered.

What is Decentralized Finance (DeFi)?

DeFi is short for decentralized finance and a term that started to become popular around 2020. This is a highly disruptive technology as it takes out the middleman (financial institution) and allows everyday users to participate in financial transactions that weren’t possible before — like lending.

For example, in the past, the most popular method to buy and sell cryptocurrencies was through centralized exchanges (CEXs). These exchanges would make a small fee on each transaction that was completed. With many hundreds of thousands of transactions performed a day, these small fees (per transaction) would add up to a significant amount.

Now with the advent of decentralized exchanges (DEXs), individuals (instead of the exchange) are able to put up the collateral to help facilitate the transaction and in return make a percentage from each transaction. Since this collateral could be used to process many thousands of transitions per day, the fees charged would add up to a significant amount — allowing for extremely high returns on the investment. Add this to the miracle of compounding and the types of APY’s we see offered by many of these DeFi projects become more realistic.

While this is a very basic example of one particular use case for DeFi, it’s important to note there are many methods to derive passive income from the DeFi sector. This article will focus on just DeFi staking and projects that support high APYs for staking their tokens.

Olympus DAO (OHM)

Likely the most popular (and pioneer) in this market is Olympus DAO. This project was introduced in February 2021 and since its inception, it has been able to offer its investors an extraordinarily high APY.

Taking a closer look, a few months ago this DAO was offering an APY of 180,724% and over the last few months, it has decreased to the current rate of 7,697%.

For the last three months, the APY of Olympus has stabilized around the ~8,000%. That’s not to say it would go up or down from this point. Since Olympus DAO is less than a year old and it's the first of its kind, there is no precedent for what is possible and subsequently, it's difficult to know what the future APYs will be for this type of project in the long term.

What is Olympus DAO?

Olympus claims to be “The Decentralized Reserve Currency” and through the use of community-owned decentralized financial infrastructure, its focus is to use the token to create a store of value that is stable (or increases in value over time).

While its price hasn’t exactly been stable over the last nine months, it’s worth noting that this token is trading at just under $800 and has an all-time high of ~$1,500.

Olympus has been called one of the most interesting economic experiments in the DeFi space and I would certainly agree. While this is certainly a very interesting project and worthy of further research, a detailed look at this project is out of the scope of this article (however I do hope to delve more into this in later articles).

With the market success of Olympus DAO, over the last few months, there have been many forks and copycats (no pun intended) of this project. — like the next project.

Wonderland (TIME)

As we saw with the extraordinary APY offered by Olympus DAO when it was first launched, Wonderland (TIME) is now offering such extraordinary APYs, at the time of this article — 88,830%.

Although this project has only been live for around three months, you may be surprised to note that its market price is around $8,500 and has been trending upward during this period.

However, just as with Olympus DAO, the revenue from this investment doesn’t come from the market price, rather the APY from staking. The project is a fork of the successful Olympus DAO (OHM) and it is also important to mention it is built by an anonymous team.

The TIME token is at the heart of the protocol and allows its holders to retain their purchasing power with some of the most impressive and sustainable yields we have seen within the DeFi sector.

Are these APY’s sustainable? If we compare with Olympus DAO, they have decreased over time yet, still retain APYs at extraordinarily high levels.

Both of these projects are brand new to the marketplace this year and two projects I will be looking into further.

What does the Future of DeFi Look Like?

With the success of Olympus DAO and now the many new forked OHM projects, the yields they are offering are nothing but extraordinary.

Projects like Olympus DAO are a whole new breed of financial instruments that have been around for less than a year so there is no precedent here. However, given the success they have achieved in the short term, it's certainly worthy of further attention.

While none of this article is intended to be financial advice or an endorsement for either of these projects, if you are interested in following our journey as we delve deeper into these types of projects, follow us on our website - AltcoinInvestor.