A Clear Case of Miss-staken Identity

Sorry for the puns coming your way, but this staking journey has led me to many interesting roadblocks that have made me a bit punchy. The most recent happened last week as I was looking into staking my OM.

OM is the governance token for the Mantra Dao project, and I believe this token will appreciate significantly over time. But holding that aside, I’d like to explain a few details about the conundrum I find myself in currently and how I plan on fixing it.

My Current OM

I won’t tell you what I spent on my current OM since I bought it last year, and it happens to be on sale now. But currently, I find myself with a total of 140 on chain and about 100 in each of two crypto exchanges for a total of 340 OM.

At this point, OM is trading at 0.04160470 USDT, and my holdings’ grand total USDT value is worth just under $13 (340 * 0.04160470).

The withdrawal fees for this amount are incredibly onerous at this time. For example, to withdraw from Kucoin onto the ETH network is 240 OM, a greater cost than the total assets I wish to remove.

You see, 340 is a large number, but 13 is not. Let’s assume OM goes back to its all-time high of 0.86 USDT. That would make my 340 OM worth approximately 292 USDT. Let’s also assume I spent 240 OM today to move around the balance. That means I paid 240 OM (240 * .86) = 206 USDT to transfer that OM out of Kucoin on the ETH network.

This transaction would be foolish and is why I’m building the quantity of my holdings and ignoring the cost per asset and the potential for further pullbacks in the market. Preserving and increasing the number of my solid assets is my primary goal here, and I’m not necessarily concerned with the USDT value of each asset.

Offsetting Prior Investments

It’s true that I bought OM when the price per coin was exceptionally high. My investment strategy was to throw a small chunk of stable coins into several assets and see which ones stood the test of time. OM is a good asset to focus on. I didn’t know much when I first invested, and I used it in both BTC and ETH staking bots. So adding it all up, I didn’t spend much on it. I used gains from my other investments to purchase OM, so it was a cash-neutral purchase no matter the price. As a governance token for a potentially extensive network of dapps, I see a future whereby each OM generates passive revenue. Currently, the price has gone down quite a bit, and my long-term outlook on OM is strong enough to invest a little more and lower my overall per coin cost.

So, say I spent $0.5 per each of the 340 OM I own now; that would have cost me $170 and is a sunken cost. Now assume I buy 1000 OM for a cost of $41.6 (0.04160470 USDT each OM), pushing my total amount of OM to 1340. My total cost for the 1340 OM would be $211.6, which lowers my per OM cost to $0.15746269— to be precise. This amount is certainly not the $0.04 I’d pay today, but much lower than where I expect to sell OM, so it pulls me back into a solid position for the long term.

I’m not setting up to buy precisely 1000, but I believe in this use-case, the all-time high won’t be where the price appreciation stops. I’m also optimistic that this asset becomes rewards-based like I hope UNI and SUSHI may become.

In general, I’m doubling back on prior investments like this one to do the necessary research and make sure I pick and place things properly for this next market phase. I will stake the assets I can and build a proper DCA plan to grow the quantity for the ones I believe in just as soon as I get my bots back online. I need to start generating new stable coins again with my fishing bots.

Miss-staking Gains

Just as a savings account grows in dollars, an OM staking account matures in OMs. 

This is where it gets interesting. 

The APY for OM is currently 36%. This means if one were to start the year with 1000 OM, they would end it with 1360 OM— not a bad return, in my book!

I have 140 OM staked on the ETH network and have gained 40 new OM for a total of 180 now. Since they are staked on the ETH network, I haven’t claimed the rewards yet because it’s incredibly costly, but they will keep accruing. I’m hopeful that network fees will drop substantially after the ETH merge, and I can start re-staking my OM on the ETH2 network. So technically, I have 380 OM now and would have 1380 OM after I purchase 1000 new OM. This acquisition brings the total USDT value of my OM to 57.414486.

In my attempts to transfer more OM, I uncovered the roadblock of ETH network fees. But it’s equally important to note that the staking is super critical. I have to figure a way to get this done because I need to stake OM now that I have a larger quantity and the APY is high. Eventually, this APY will reduce and most likely disappear. Don’t assume it’s a waste to stake anything because the total OM I own is only worth $13 or even $57 if I were to buy 1000 more OM. Remember that the APY is measured in OM, not dollars. This is how folks miss-stake gains as nominal when they could be astronomical.

So, staking 1380 OM will yield 496.8 new OM each year I stake them. That’s 496.8 OM added to my total balance, bringing it up to 1,876.8 (1380  + 496.8) which even if OM goes back to only 0.21, it will be worth $394.128 (1,876.8 * .21). This puts my OM into a gain of 182.528 USDT (394.128  – 211.6) and lowers my per OM cost to 0.112745 USDT. Here’s hoping I can add and stake more over time to reduce the cost per OM even further.

So you see, gaining in non-stable currencies could potentially be far more profitable as you earn in quantity and realize the dollar value gain more times. For this reason, I’m staking anything and everything I can. 

But Why OM?

You might be wondering why OM when the staking prices are so high. Well, OM allows for staking on the Binance Smart Chain, which tends to have far lower fees, and I’m going to push forward with this effort this next week. I believe I can consolidate all my OM, buy a little more, then transfer it all from Kucoin to my BSC wallet and stake that OM there, gaining the same rewards but not having such hefty fees.

To do this, I have to start getting creative by selling OM on other exchanges and accounts and re-buying them on Kucoin at a discount. This strategy should allow small gains as I consolidate my current position into one with easy withdrawal on Kucoin, which I believe has only a 1 OM withdrawal fee on the Binance Smart Chain network, thus reducing my fees by more than 99%.

Unfortunately, the Binance Smart Chain withdrawal system within Kucoin is under maintenance, so I have to wait. But that’s okay. I think I’ll need some time to complete all these steps anyhow.

NEO

Let’s talk NEO. It’s an entire blockchain with a complete network of dapps and assets like VET or ZIL. Many believe NEO isn’t going anywhere, but I wondered about its longevity. I have a few left from my initial investment stage and rather than selling them at a huge loss, I put my money where my mouth was and did some research to figure out how to maintain this asset.

In Crypto, many starting stories for older coins like NEO include a contract migration. It sounds confusing for users, but most projects make it easy or even fun to do. In the beginning, there was only ETH and its contract system, so projects like NEO needed to either re-use the coded mechanisms from the open-sourced ETH project or use the ETH network until they could develop their own processes. And unlike other assets, NEO has not died and has made it through to the other side.

This situation gives initial investors a choice: migrate their tokens or let them die. I chose to migrate and stake to see if I could start passively recouping my initial investment. Don’t be fooled, though. This proved to be a nice asset to bot with. I stacked a little ETH and BTC botting with my NEO, so even if the NEO doesn’t ever amount to anything, I’m happy as the ETH and BTC will appreciate over time and make up for the dollar loss of buying into NEO.

Back to the logistics— I migrated the 6 NEO I bought for $25 each (ouch!) since they are each worth 9.81 USDT today, making this investment on a dollar basis a losing venture so far. Then

I migrated using the neon wallet, which took a while and some poking to complete. I had to buy 1 GAS on Kucoin for 2.6 USDT and transfer it into the wallet to fund the migration. Apparently, to move NEO, you need GAS; that’s the NEO blockchain rule. And when you hold NEO, you earn GAS, which I believe is exchangeable with NEO on-chain.

Once I went through all the steps, I logged out and back in to see my new self-staked NEO earning GAS, exactly the way it was intended. I should have done this long ago, but my initial thought was that it was too difficult. It probably was back then, but they cleaned up the interface, making the process fairly straightforward. Here’s to another “to do” checked off my list! Now I don’t need to worry about NEO unless I hear something positive in the news about them.

Wish Me Luck!

I hope you can see that when staking, you consider only the quantity of the asset and the cost to stake the asset. It shouldn’t matter what the USDT value is so long as it costs less of the asset to stake than what you will get back in rewards. Staking will grow the quantity of the assets underneath; if you have a larger amount to start with, the growth will be even more considerable over time. The longer you stake, the better off you will be. But be warned, there are cool-down or lock-up periods where your staked assets are frozen, so if you want to have liquid assets, don’t stake it all. Instead, stake only the HODL portion of your bag. My approach is to either stake everything or nothing at all, so unless they are part of my active trades, I’m funneling new purchases into the existing staking contracts over this next buy cycle.

Make no miss-stake—my task list has a ton of potential staking action.