Let's make money from crypto WITHOUT trading
CRYPTODAY 139
As 2024 draws to a close, I’ve been pondering some long-term questions. Having recently gotten engaged, I’m rethinking how I want to spend the rest of my life on this planet. One thing I’m finally starting to accept: I really don’t like trading crypto. Although I’ve managed to grow my portfolio by a lot this year, I disliked how seasonal the earnings were. I don’t like how I spent most of 2022-2023 living modestly, only to start splurging like crazy when the bull market hit. It’s not a particularly healthy way to live, and it makes you extremely vulnerable to externalities like illnesses or accidents. As I venture into starting a family in the coming years, I don’t think it’s an ideal situation to place ourselves in.
I’m sure I’m not the only adult who thinks this way. There are quite a few people in my age bracket that look at all the crypto bros screenshotting their 10x gains and instead of being really envious, are probably thinking, “Wow, I wonder how much sleep this dude gets.” I’ve largely stopped caring about these engagement-bait victory screenshots, because they’re just momentary glimpses of an always-fluctuating state of gains and losses. What this game is really about is how quickly you can take all of those gains and use them to hit (the extremely subjective goal of) Financial Freedom and Security.
So in 2025, my goal is to dial down the trading and work on a steady wealth accumulation strategy that builds up my cash position over time in a predictable way. The goal is to generate at least 12% yield per year without sacrificing security and flexibility. In other words, I’m looking for reliable, consistent financial instruments where my capital stays liquid and generates yield that I can claim whenever I want. For the sake of easy math, if we have a starting capital of a million pesos, we want to find reliable instruments that will give us 10,000 pesos per month consistently without being locked up or frozen. In the traditional finance world, these numbers are basically impossible without venturing into the realm of high-risk investments, but in crypto they’re “reasonable” … if you know what you’re doing, that is.
So yes, basically, I’m lazy and don’t want to work hard for my money. And yes, I know that I sound like a privileged prick for even daring to write those words. But look at it this way: if you’re in your twenties right now and staring hungrily at charts until the wee hours everyday — with tired eyes and sweaty palms from the countless stop-losses and over-leveraged liquidations — you probably want to know that you won’t still be doing that when you’re 40, right? Well, my goal is to work out a long-term strategy that’ll get you (and me) to “Financial Freedom” with the least amount of energy expended. Essentially, I want to work hard on this so I can afford to be lazy in the long run.
One important caveat: I’m not including any high-volatility coins in this strategy. This strategy is entirely going to be based on stablecoins. There’s a strong narrative around how the next wave of innovations will happen in the stablecoin sector this cycle, and keeping ourselves updated on these new projects is a good idea. (One truism in the crypto world: wherever there is hype, there are airdrops, and nothing helps pad your earnings like free money.)
So let’s get started! The laziest version of this strategy — and really, the first stop for anyone who is experimenting with this stuff — is Nexo.com, arguably the world’s largest centralized crypto bank. These guys have been operating for 6 years now and have over $7B in assets under management. You can get 9% per year on your USDT or USDC deposits from them, and you can boost those yields to 12% by voluntarily locking your funds up for periods of 3 months at a time. I park a lot of my capital in Nexo while I’m looking for better instruments because it’s so convenient. The yield comes from the fact that, like a traditional bank, Nexo lends your funds out to other crypto organizations and/or users. For this reason, you can earn yield even on Bitcoin, Ethereum, etc., although those yields are much more modest — between 2 to 4% p.a.
Of course, Nexo is centralized, so there’s some custodian risk — they could get hacked, debanked, or regulated out of existence. Remote possibilities, to be sure, but possibilities nonetheless. If these are the kinds of things that worry you, then your next stop would likely be the decentralized version of Nexo: Aave.com. Unlike Nexo, Aave is not a company but a lending protocol. The Aave website is merely a marketplace of those who have capital (i.e., people like you) and those who want to borrow capital (i.e., everyone else). The Aave protocol manages about $32B in collective assets, and dynamically adjusts yields and rates based on the availability of funds. It can’t promise 12% p.a. yield on your USDC deposit, but it is usually within 2% of that. It is extremely flexible in that you can withdraw your funds at any time and you’ll still keep whatever you’ve already earned. It is worth mentioning however that although there is no custody risk here, there is instead a technological risk: the protocol could unexpectedly fail or the various vaults that the protocol uses could be attacked. That said, Aave has been around for 7 years and is considered one of the cornerstones of decentralized finance, so I’m not too worried.
These next two are what I consider extreme-high-risk because of how young they are. They haven’t been battle-hardened in the same way that more established protocols have. The first is the real-world-asset protocol Usual.money, whose website defiantly claims “Together we are bigger than BlackRock.” The Usual project issues a stablecoin called USD0, which is backed not by dollars, but by US Treasury bonds. (Basically, you are lending your money to the US government and they are paying you back with interest.) This is a very standard mechanism for generating profit — it’s the reason why Tether and Circle make so much money each year from their respective stablecoin offerings — and Usual’s innovation is that they’ve directed those Treasury profits to the holders of USD0. Because the Usual project is young, their yields are heavily incentivized right now — their annualized rewards are currently sitting at over 30%. I don’t expect that reward level to last, and it’ll likely settle to the low teens within the next few months, and eventually approach the true yields of US Treasury Bonds, which are at ~4% as of late 2024. That said, Usual’s recently announced partnership with the BlackRock liquidity fund makes this an interesting project to keep an eye on in the long term.
My last example is Ethena.fi, which is a stablecoin project that launched in 2023 with an interesting stabilizer mechanism: if you simultaneously opened a long ETH position and a short ETH position, you would earn zero dollars because each position neutralizes the other. That sounds dumb if you’re a trader, but it’s genius if you’re trying to synthesize a stablecoin — your net dollar value never changes. This is called delta-neutrality, and it’s at the heart of what keeps the Ethena dollar USDE stable. Since it uses ETH and other cryptos as its stabilizers, it doesn’t need to rely on banks like USDT or USDC. It can theoretically maintain its $1 peg for as long as both its long and short positions stay open. I was initially skeptical of Ethena, but it has weathered enough rallies and drawdowns in 2024 to indicate that it’s probably not going to collapse overnight. If you choose to stake your USDE with them, you currently get 12% p.a.
When I sat down to write this newsletter, I decided that I was only going to cover platforms where I felt confident enough to deposit at least a million pesos. Everyone has a different tolerance for risk, so you’ll have to calibrate that against your own comfort level. Importantly, I don’t know if 2025 will allow me to fully abandon speculative trading — it’d be stupid to completely ignore a rising market. As things stands right now though, I’m in full sell mode, and I’m directing all of my profits into the yield-bearing instruments above, along with a few others (Hyperliquid, Pendle, Aerodrome) that are a little too risky or complicated to recommend here. Good luck out there and hope you all have a great 2025, cryptofam!