Hello SPIers. Today we look into DEFI "income" and explain why they are a scam.
Most of us within the crypto space will have heard of "Drip" projects. These platforms will claim that investors users can make something like 365% yields by collecting 1% per day for 1 year. They are all different but 1% per day for 1 year seems to be the standard package. All you have to do is buy their token, stake it and then claim you're daily reward.
They are targeted toward poor people and their marketing plan is to sell you the dream of getting rich for little money and no work. You invest a little, compound your drips daily and after some time, you'll be rich. As an example to show you how ridiculous these claims are, if you could invest $100 and compounded at 1% daily for 2 years. You'd then have $142,658 and you'd be collecting $1426 per day.
They will normally but not always have a frontman founder, the best ones do. This will be someone that has come from nothing (just like you) and is self-made but still down-to-earth and relatable. They will talk alot of sense and are also excellent salesmen that can sell you the dream. These frontmen will be very active within their community and appear very transparent. They will always be shilling the next big thing they are adding to the ecosystem, new ways to earn their token. They encourage you to compound so they can burn lots of tokens and appear to be bullish. They can make you believe in them, believe in their team and give you the confidence to be stupid enough to buy into the bullshit and HODL with them long term.
Each Drip project will have its own fanboys, these are mostly made up of people that invested early and have large amounts of the token. They are over-bullish, follow the founder's every word and are pathetically cringe.
To make a point
We've all had an email from the Nigerian King saying we have $15 million sitting in an account and all we have to do is send $2500 to pay taxes to release it. If 1 in 1 million people falls for it, it's worth it for the scammer, right?
99.99% of people will look at these emails and laugh thinking, what sort of idiot believes this bullshit? It's obviously a scam.
When I see these Drip projects and look into their tokenomics, I laugh and think what sort of idiot believes this bullshit because in my eyes, they are both the same thing. One is just more sophisticated than the other.
How they are marketed to not be a scam
They all actually do what they claim to do. Remember Bitconnect? it did what it said it would do. Ah, Bitconnect, the OG, the first big drip scam. All the new ones run basically on the same model, even things like Celious and FTX with the use of their own tokens did the same thing on a smaller scale.
If they claim to pay you a 1% income drip each day. You can convert your precious ETH or BNB to buy and deposit 100 tokens and you will receive 1 tomorrow. If you compound that 1 token, you will receive 1.01 tokens the next day.
They will show you a beautiful whitepaper showing all the things they're doing like creating LP support, burning tokens, reducing inflation, building out the ecosystem, no founder or team rewards, and all that great stuff (almost to good to be true?).
They do what they promise on paper and that's the loophole that removes the founders from the responsibility of losing everyone's money. They can't make people not sell the tokens so how is it their fault? The fanboys and community see them as only doing good but the model is rotten to the core.
Why they are scams
THE TOKENS ARE WORTHLESS and have no use case, no claim of ownership, no backing and are minted from thin air. You deposit your money and it's gone. You just bought a non-refundable, non-transferable and non-sellable "income package".
They are glorified Ponzi schemes and when you "stake" the tokens for a daily drip income, you have just "spent" your money and you can't get it back. The only way you get your money back is to withdraw your daily drip payment.
They have no control of the token price. They will say they do but they dont. New drip-like projects run hot for 2-9 months as new investors invest fresh funds and compound. After 2-9 months, these early investors began to cash out which adds alot of consistent selling pressure for the token. As more time goes by and investors' bags get bigger, the selling pressure increases and the token price drops 90-99%. Selling demand will always grow over time and buying demand will decline. Straight fact!
If tokens were released at $1 and you bought 100. After it drops 99% to a penny, which it will because its only real use case is to sell it, your 100 tokens would be worth $1 but you would still be earning 1 token per day. If it took 6 months to drop 99% and you had compounded daily for those 6 months, you would have 614 tokens (best case) and you'd be earning 6.1 tokens per day which would be worth 6 cents (how much are gas fees?). $0.06 for 1 year is $21.91 and would represent a 21% ROI on your initial $100 investment which is not half bad. Oh wait, no..... the gas fees, compounding or withdrawing daily for a year would cost $73.05 at $0.20 per transaction on BSC.
Even on larger amounts, is earning 20% APY worth having no access to your "investment"? The price keeps falling each year, it would take you decades just to get your money back and all the time, you're paying gas fees.
Technically on paper they are not scams because they deliver what they promise but in black and white with no bullshit, They are a scam. In terms of dollars, you'll lose money every time. They have all the traits of a scam including the promise of getting rich quickly, fantastic affiliate programs, how to max your profits courses/videos, self-made community leader salesman founder, daily AMAs, cant cash out your investment, no use case and donkey crypto YouTubers shilling it.
Please do not invest in these sorts of projects
You not investing your money, you are spending your money and you do not get it back. If you put USD, BTC, ETH, BNB, you will not get it back. You can withdraw every day and convert to USD but as the token price drops, so does your daily drip. What you thought would take 100 days to get your money out is now taking much longer. If the token price drops 90%, it'll take 3 years to get your money back, 3 years of having to log in, claim drip and convert to USD. If the token prices drop 99% which they will after enough time, it'll take more years than you have to live just to get your money out.
If you invest in these with hopes of getting rich, I'll hope your day job pays well.
If you want a passive income from crypto, look into the HIVE ecosystem
Buy any of these tokens and receive a passive HIVE income. The APY's are not crazy but the tokens will not drop 99% either. Buying $100 of SPI to earn a div of 8% APY per year is not great but when your SPI tokens double, or triple in value, your dividend doubles and triples in APY based on your initial investment plus, your investment will have grown 2-3x as well.
Earning 8% per year with SPI for 10 years will probably yield better results than earning 100% per year for 10 years with something like CUB. Its not a drip crypto but it's not a million miles off either, everyone knows it and we've all seen it drop way over 99%.
Here a few tokens you should check out if you're serious about creating income.
| HE token | APY | Token growth since launch |
|---|---|---|
| SPI | 8% | 6x in HIVE value |
| EDS | 35% | Pegged to 1 HIVE |
| BRO | 7% | 4x in HIVE value |
| LGN | 10% | up 20% from release 4 months back |
| INCOME | 8% | 10x in HIVE value |
| ARMERO | 18% | Was an airdrop. APY worked out from the last sold price on HE |
I am sure there are more but these are ones that SPI holds and ones I have used and can vouch for. Looking at INCOME as an example. If you bought 100 INCOME for 100 STEEM back in the day, today your INCOME tokens would be worth 1000 HIVE and earning you an INCOME of 80 HIVE per year. Earning 80 HIVE is equal to 80% of your 100 HIVE investment. If it price were you double ever the next 3-4 years, you'd still be earning back each year morethan you invested.
APYs mean nothing when the token is bullshit.
Safe Investing folks!
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Im just reading back over this and i have an idea for a good drip income project. Ok, so check it out.
We sell tokens and peg them to 1 HBD each, no limit and forever
We convert all the HBD into BTC
Each month, we remove 1% of the BTC and convert it to HBD
We split that HBD amount by 30 days
We ship out daily HBD drips to token holders
The end!!
The idea would be to remove 1% of the BTC each month to fund daily drip payments. This result is the BTC balance dropping by 11.5% per year because the 1% is a little less BTC each month.
Now, do we think the price of BTC will increase by more than 15-20% on avg each year for the next decade? So BTC balance goes down over time but $ value increases. It like (sorta) earning 10%, taking out 5% and leaving 5%. Not really but that's an easy way to explain it.
There you go. It would not be 1% per day but if you held for a few years, it would have a much better chance and the tokens would be pegged to 1 HBD.
If we sold 28,000 tokens today and bought 1 BTC and shut down sales. When BTC hits $1 million in a few years and half our BTC is gone from paying out drips, tokens holders would be recevieng a daily drip equal to 17.85% per month are 214% per year. You invest $100 when BTC is $28k and when BTC hits 1 million, you earn $214 back each year and your tokens are still worth $100. You lose to inflation, lol. If you compounded your daily drip, fook knows what your APY could be.
Everyone think im crazy but look at this shit above, its just a fart thought but you see it would work if BTC can continue to grow in dollar value which i think it will. All these super genuis scam visionary genuis are thick as bricks and lack oringal thoughts, instead driven by instant profits.
| Token Name | Main Account | Link to hive-engine |
|---|---|---|
| SPI token | @spinvest | SPI |
| LBI token | @lbi-token | LBI |
| Top XV token | @spinvest | XV |
| Eddie Earners | @eddie-earner | EDS |
| EDS mini miners | @eddie-earner | EDSM |
| EDS micro miners | @eddie-earner | EDSMM |
| CUBlife | @lbi-token | CL |
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