Surviving downturns in the crypto market
The top is in…we’re going to zero…bear season has arrived…red only…
Listen…crypto is an extremely volatile industry. Not a single soul knows when it will go up or go down. The only thing you can do is learn how to handle the dips as well as you handle the surges. This article won’t tell you to make sure you have 30% in stables or any strategy like that. If you knew the market was going down, why not go all in stables and then buy the bottom. As stated above, no one knows. Instead, we can focus on finding assets we believe will survive any market conditions and compile those in good times and bad.
BELIEF IS KEY
Believing in the asset is of the utmost importance. Conduct your own research on the projects before investing. I focus on real world use case, the technology, and the team. If those three exist on a project, it is time to follow and get involved in. The next key factor is a way to grow my assets without additional revenue. Staking and/or farming the asset is one of the keys to surviving a downturn. When the market goes down, instead of worrying about the dollar amount of my assets, I focus on accumulating the assets I believe in.
The concept of decentralized basic income or passive income through staking/farming crypto can help look past overall portfolio performance. But let’s not forget, having a pile of worthless assets is no better than a single worthless asset, hence why we discussed believing in the project.
COMPILING WITHOUT COST
The process of collecting rewards on my crypto portfolio is something that I look forward to each week; visiting a multitude of sites and collecting my rewards and treasures. This is purely the result of staking and farming.
**Important to note, the benefits of using a network like Harmony ONE for these items. Transactions cost a fraction of a penny and execute in 2 seconds. On other networks, each transaction can cost dozens of dollars and take several minutes. If you aren’t familiar with Harmony right now, hopefully you will be by the end of this article.**
A quick recap on the difference between the terms staking and farming:
- Staking locks up your tokens for safe holding into a smart contract and in return you receive rewards for doing so.
- Farming involves taking two tokens and combining them into a liquidity pool (LP) token. You can then stake the LP token on a decentralized exchange (DEX). The DEX will use the staked LP tokens to operate swaps on its site. For allowing the DEX to use your LP tokens, you will receive rewards.
Staking and farming allow you to accumulate more of the assets you are interested in for no cost, thus lowering your entry point of purchase. For example, I spent $10 to buy 100 OpenX; my entry point is 10 cents per token. Over a period of time, I farm 50 OpenX. Since the cost of farming is free (minus extremely small transaction fees), I have now spent $10 and have 150 OpenX; making my cost of entry 6.66 cents per token. The more you collect in rewards, the lower your entry point will become and thus the sooner you will see a larger potential profits on your asset.
LET’S GET TO WORK
To put this theory to work, I’ll use Harmony ONE and OpenSwap. This will introduce you to one of the easily solutions to getting started with staking and farming with 1 simple product.
OpenSwap’s auto-compounding validator allows you to stake ONE tokens on its Harmony validator. By staking $ONE, you receive rewards in the form of $ONE, at present time roughly 10% APR. What makes OpenSwap different is the next part. Those $ONE rewards generated are taken and automatically turned them into liquidity pool tokens and staked on OpenSwap. Why does this matter? Those staked LP tokens will start earning additional rewards; 60% APR at the time of this writing. Essentially, it automatically reinvests your rewards into an asset that makes a higher APR% and creates additional rewards. Below is a step by step guide to staking ONE on the OpenSwap validator and setting it up to auto-compound your rewards.
STEP 1: Go to openswap.one
STEP 2: Click on ‘Farm’ in the menu
STEP 3: Click ‘Details’ on the ‘OpenX Auto-Compound 20% APY Validator’
STEP 4: Enter in the amount of $ONE to stake in the ‘Stake Amount’ area
STEP 5: Click ‘Stake’
STEP 6: A popup will appear from the wallet. Enter any required security information and submit the transaction.
You have now staked your Harmony $ONE and are earning rewards.
STEP 7: Click ‘Settings’
STEP 8: Under the ‘Set Compounding Farm’ area, find the farm you would like to have your rewards converted into and click ‘Select’
STEP 9: A popup will appear from the wallet. Enter any required security information and submit the transaction.
You are now set up to have your staked Harmony tokens automatically turn into staked LP tokens earning you 60+% APR . Your rewards are available by accessing the farm page on OpenSwap.