Have Fun Staying Poor by Missing Out on Risk-Free Passive Income

DeFi Blockchain
4 min readApr 28, 2021

The outcry “Gold! Gold! In the Klondike!” unfolded one of the greatest gold rushes in history. In 1897, an army of hopeful gold-seekers boarded ships in ports along the East Coast of the US and headed north toward the vision of riches to be had for the taking. Most of them were uneducated day laborers, blindly following rumors, they weren’t able to verify, just to hit the promised golden jackpot. A few made it, most didn’t.

The Sooner You Know About Risk Free Passive Income The Better

Little has changed over the last two centuries. People are still looking for the quick bucks, following the Bitconnects and Safemoons of today and wondering why they don’t make it. For most of them, pursuing a long term investing strategy, which also incorporates ways to let your money work for you, isn’t part of their mindset, which makes them miss out big on risk-free cash flow opportunities.

As the word cash flow implies, money is regularly hitting your account — like passive income — making it the perfect vehicle for the magic of compound interest: The more frequently your money earns interest, the faster and bigger your balance will grow. As interest is added to your account, you earn interest on the original balance, plus the previously earned interest. As a result, your total capital will grow much faster than if you would compare it to simple interest (see Figure 1).

Using and investing in DeFiChain kills two birds with one stone, combining high yields with fast and reliable cash flow payments, transferred directly into your wallet address in a cryptographically secured environment. And most importantly, the yields for staking have skyrocketed to 100% APY over the last few days.

If You Don’t Stake Now You’ll Hate Yourself Later

Being a hybrid Proof-of-Stake blockchain means that block rewards are paid out to all masternodes on a regular, pre-defined basis. With the recent amendments it’s not only much easier to become a masternode operator yourself, but also the yields tripled due to DeFiChain’s early stakeholders burning 156 Mil DFI worth US$ 0.5 Bil to increase decentralization and transparency.

Burning 156 Mil DFI was nothing else than a gigantic demand shock, “unplugging” 7,800 masternodes from the network and decreasing the pool of people eligible to receive block rewards. In Figure 1 you can see that from the previous 15,700 masternodes holding a total of 314 Mil DFI coins, half “vanished overnight”, with just 7900 masternodes remaining active and securing the network (red part).

On the other hand, though, the network is still emitting the same number of DFI coins roughly every 37 seconds (135 DFI per block). It’s simple maths: Assuming you have 10kg of food to distribute to people and unexpectedly just half of the previous crowd shows up, then those remaining people can eat double as much as they used to before. The same holds true for DFI, where fewer masternodes still receive the same amount of DFI coins, resulting in higher overall yields. This is also the reason why the APY skyrocketed to 100% APY in the days after the coin burn took place.

Investing in DFI is as Risk Free as Holding Bitcoin

If you are already a long term believer and investor in Bitcoin, then there isn’t really anything better for you than investing in DFI. Part of the reason is that DFI and Bitcoin almost perfectly correlate with a correlation coefficient ‘r’ close to +1, meaning that when Bitcoin goes up, DFI goes up as well and vice versa.

In addition to the correlation, the exchange landscape also plays into the riskiness of an asset like DFI. If one exchange — in DeFiChain’s case the decentralized exchange (DEX), directly built into the Wallet App — encompasses the majority of liquidity with an “order book” so deep that an exchange of hundreds of thousand of US$ can’t even move the price by a few percent, then it acts like a rock in the surf protecting your hard earned money from becoming devalued over night by sudden outflows of capital, respectively huge sell orders.

Just think about the DEX as a big cruise ship, where huge water tanks inside the ship keep it in balance at any time — also during bad weather when huge waves hit the bow of the ship. Consequently, with a liquidity buffer of US$ 300 Mil, the DEX can be compared to a supertanker dampening the negative price effect of huge sell orders and making your investment less prone to volatility and your returns virtually risk free.

DeFiChain is a highly decentralized blockchain built for DeFi applications. As such, masternodes, wallets etc. have to be set up by the primary user. However, if you are still keen on achieving fabulous returns of around 100% APY and don’t want to educate yourself first, then we would suggest trying out our exclusive staking partners instead — Cake DeFi’s Staking service

Originally published at https://blog.defichain.com on April 28, 2021.