Pretty unbelievable result. Never thought I’d ever have a monthly seven digit increase in net worth.
But crypto.
Loving DeFi – it’s pretty much taken over my life at this point. Logging in each morning and checking my yield farms, harvesting my rewards. And I really like the passive income aspect. I’m not just buying some shitcoin (*cough* SHIB *cough*) and praying it moons. Instead, I’m trying to pick quality DeFi projects, then combining them with my ETH and stablecoin holdings to earn high double digit (sometimes triple digit) APR. It’s a game changer.
Still busy with the regular business as usual. But looking to take a few months off early next year to go travelling.
25% are still in ETFs (nearly all VDHG)
Turbo FIRE Australia 
I’d love to find out more about what Defi projects your are using and how passive they are. Like you I started off investing in index funds, dabbled a bit in BItcoin and now Crypto risks taking over my life. Looking at https://defirate.com/earn/ I feel like this is a rabbit hole of the deepest kind, any learnings you could share would be very interesting!
LikeLike
Hey mate, it definitely is a deep rabbit hole!
Going from safest to riskiest, I’m currently using the following DeFi protocols.
1. AAVE and Curve – standard and most popular Automated Money Markets (AMM) for lending and borrowing
2. Curve & SushiSwap – two very popular DEXes. I do a lot of liquidity providing (LP-ing) on various SushiSwap pairs
3. Anchor Protocol – very simple flat 20% APR on their stablecoin UST
4. Beefy Finance – yield aggregator (automatically does the compounding for you for DEXes such as Curve and Sushi)
5. Abracadbra (SPELL) / Olympus (OHM) / Wonderland (TIME) / KlimaDAO (KLIMA) – these are all pretty far down the DeFi rabbit hole, but very solid projects once you do your research.
My only advice would be to take it slow, play around with lots of protocols. You’ll make mistakes of course, but you’ll learn from them.
Unless you’re playing with a larger stack (e.g. 6 figures and over), I would avoid Ethereum completely due to the insanely high gas fees. Some good ecosystems to try DeFi out with low fees include: Fantom, Avalanche, Solana, Terra, Harmony. There’s BSC and Polygon too, but personally I’m not a fan of either.
Also take a look at Taiki Maeda videos on YouTube. I learnt a lot from him early on.
Good luck!
LikeLike
Thank you sir! I have tried to avoid it but have gone down the rabbit hole a bit, spent a lot of time on Taiki’s channels too so have started out tentatively with Aave, Curve and Yearn with just small amounts. Trying to avoid Ethereum where I can with the small amounts I’m playing with (using Avalanche and Polygon atm)
I got to Abracadabra and realized this could easily become a day job/make me lose my current one so am trying to pull my head out of the hole now! Playing with leverage takes the passive part away quite a bit..
LikeLike
There’s no need to even touch leverage tbh, crypto is risky enough without it haha. For Abracadbra I personally just stake my SPELL, as SPELL stakers get distributed the platform’s fees each week. Make money off the risk takers who decide to lever up.
Also some of my favourite farms are things like the USDC/USDT/MIM pool on Beefy Finance (Arbitrum). Currently at 42.83% APY, and you don’t need to do a thing as Beefy does the auto compounding for you. Completely passive and low risk, as stablecoins should always equal 1 USD in value.
LikeLike
Interesting, I figured these circular loops of lending then borrowing was the way people made the real money in this stuff.
For that above pool, you’d need to get some MIM2CRV first right, rather than being able to leverage your stablecoins?
Thinking the tax implications would start to get a bit nasty with all this swapping of tokens too?
LikeLike
First point – There’s a million ways to make enormous gains in crypto. You can even buy dog coins that do 1000x in a few months lol. The more degen the play, the bigger the upside. But with that huge reward comes higher risk of course. I personally try stay away from it, but I might be in the minority here.
Second point – That’s correct. When you click “Add Liquidity” it’ll take you to Curve Finance where you can deposit any mix of USDC/USDT/MIM and it will give you the MIM2CRV receipt token. You then deposit that Curve token into the Beefy Finance pool (and do the reverse steps to go back to your original stablecoins).
Third point – Agree. Aus tax implications with DeFi is really complicated. I’m hoping the ATO see common sense and come up with a simpler and more effective way to tax crypto gains. Perhaps tax on crypto to fiat outflows, rather than trying to tax every single crypto to crypto transaction. Otherwise trying to sort through millions of transactions, gas fees, swaps, lost coins etc. It’ll be an admin nightmare for all parties involved.
Alternatively, you could always move to Portugal as a tax resident for their 0% tax on crypto 😉
LikeLike
Perfect, thanks mate. That’s the step I wasn’t quite grokking vs just adding liquidity to Curve. I think I have a new home for some of my play USDC money as I test this stuff out.
Sounds like I’ll need to eventually back one or two of these and put some proper money in to make this all worthwhile. Six figures would make the mouse click a bit slow to confirm though! If you are backed by stablecoins that would make me sleep better though. Thanks for all the help!
LikeLiked by 1 person
Hey, sorry one sneaky more question, hope you don’t mind. Looking at Arbitrum on Beefy, it looks like you need to use ETH for it’s gas fees which will be a bit expensive for my initial tinkering.
I have some free MATIC from a faucet to allow for free transactions on Polygon. Is there any reason why the below would not be a good bet considering it’s hovering around 50% APR for my USDC?
https://app.beefy.finance/#/polygon/vault/curve-poly-atricrypto3
Or are you more interested in the MIM component of MIM2CRV (if that makes any impact?)
LikeLike
All good – happy to help.
Arbitrum is a layer 2 to Ethereum (what’s known as an Optimistic Rollup). The main reason it was created was because Ethereum gas fees are way too expensive at the moment. Arbitrum is much faster than Ethereum mainnet, and fees for transactions are much lower at around $5 – $10.
Polygon (MATIC) is great for beginners though because the transaction costs are tiny (few cents). However that pool you linked is for Curve TriCrypto3. It’s a pool that is an equal split of BTC-ETH-USD. There is something called Impermenant Loss, which is a key risk with DeFi. Can read more about it here:
https://pintail.medium.com/uniswap-a-good-deal-for-liquidity-providers-104c0b6816f2
The TL;DR of this is: With TriCrypto3, if one of the coins pumps (e.g. ETH) and the others remain flat or go down (e.g. USDC stays flat, BTC goes down), you will incur impermenant loss when you exit the pool. One way to avoid impermanent loss entirely is to enter a stablecoin only pool as the price of all the assets will remain the same.
A lot of this stuff probably sounds overly complex for a beginner to DeFi. For your first platform I would just go Anchor Protocol on Terra (LUNA). Earn a flat 20% APR on their stablecoin UST. Fees on Terra are quite cheap too. It was the first ecosystem I personally learnt DeFi on before branching out to the other stuff.
LikeLike
Brilliant, thank you. Yes, the IP stuff is all coming back to me now! I’ll check out Anchor too thanks – I just can’t help trying things out (and generally learn the hard way.. I find it sinks in better than hours of Youtube vids)
Just, checking my thoughts on your below comment:
Also some of my favourite farms are things like the USDC/USDT/MIM pool on Beefy Finance (Arbitrum). Currently at 42.83% APY, and you don’t need to do a thing as Beefy does the auto compounding for you. Completely passive and low risk, as stablecoins should always equal 1 USD in value.
Doesn’t the fact that MIM is part of this make it quite risky regarding IP since MIM is very new and likely to be quite volatile?
LikeLike
Not really, MIM is not volatile at all. Check out its price graph. Remember, MIM is a stablecoin pegged to $1 USD.
Also this Twitter thread might interest you. All about stablecoins and FI.
LikeLike
Gees, you’d think I hadn’t discovered google sorry, for some reason MIM in my head was not a stablecoin (I’d blame it’s name of Magic Internet Money)! All makes sense now thanks.
LikeLiked by 1 person
ps that Twitter thread is amazing, thank you!
LikeLiked by 1 person
Hey, I had a pretty interesting time with some hairy bridging moments and unsuspected huge gas fees, all part of earning your Defi stripes no doubt.
Always good to chat with locals playing in this space, if you’re open to it would be great to connect on Telegram
https://t.me/Otherwise_Difficulty to share war stories and tips.
LikeLike
Hi – congrats on hitting nearly $5m!! I’ve had so much fun reading your monthly blog posts this past hour!
Crypto newbie here so pls be kind 🙂
Just wondering – with over $3m in crypto, what do you use to secure your coins? Do you keep them in a hardware wallet?
Also what do you do about tax? My understanding is that rewards from staking etc is taxed as income and part of capital gains when you sell.
Thanks!!
LikeLike
Hi Savannah, thanks for the kind words.
Yes I definitely recommend getting a hardware wallet. I personally use a Ledger Nano S and connect it to my MetaMask.
You’re also correct regarding tax. Any staking income will be taxed at your marginal tax rate. Profits on sales of crypto follow the regular CGT laws, e.g. 50% discount if you’ve held the asset for at least 12 months. My accountant is going to hate me in June next year haha.
LikeLike
Thanks for the quick reply!
Re hardware wallet – so even when the coins are kept in your hardware wallet, you can still utilise it for DeFi protocols from the safety of your wallet?
(sorry newbie question!)
My understanding with platforms like Celsius is that the coins would have to leave the safety of your wallet, which makes it susceptible to hacking.
Re tax – are all the rewards from DeFi protocols also taxed in the same way as staking rewards? ie income at marginal tax rate and sale of crypto on CGT rules?
Also, I understand that a lot of crypto is in USD. How do you deal with exchange rate risk since we’re in Australia and mainly transacting in AUD?
TIA!
LikeLike
Yep, you can use the MetaMask extension on your browser to interact with DeFi protocols, while your coins stay safe in your hardware wallet. Best of both worlds. See:
https://www.ledger.com/academy/security/the-safest-way-to-use-metamask
Regarding Celsius, yes any centralised services (e.g. Celsius, Nexo, BlockFi, crypto.com) can give you yield on your crypto. However to do so means depositing your funds into their wallets (which only they have the private key for). You’d have to trust that company with your funds, as opposed to DeFi where you have to trust that the code/protocol is secure.
Regarding tax – yes I belive what you said is correct. Best to check with a financial professional though – I’m just a stranger on the internet 😉
Last point – yeah there’s FX risk when transferring AUD to USD and vice versa. I just track my portfolio in USD terms.
LikeLike