<div class="text-justify">

There is a fair bit of red the last few days - well, the last few weeks really, as the markets have slid away. However, it is good to note that all of the investment markets are struggling, where for example, the Dow Jones Industrial average is down 10% in January also - which is quite a bit for traditional markets that have a high degree of usecase. I think what is prudent to realize is, how disconnected "price" is from reality for the most part. 

However, we are in crypto, so let's have a little look at that and something that I have been espousing for the last year or so, which is staking for passive return and preparing for the bear markets. 

![image.png](https://files.peakd.com/file/peakd-hive/tarazkp/23xAkfLXwvvvo1yDTgosN4PSYWbMQUCaF5QTqT2sokkwqPetDx66yxpQqCRHTr54Sx4rf.jpg)

For example, I have a bit staked into CUB Finance in the Kingdoms as well as the Farms and these bring in a daily yield and as you can see from the picture below (taken from Kingdoms) it is 26% in total across those 5 assets or 0.02% a day. This is not a huge amount (better than any bank by 100x) but it does have some potential. While obviously it is better to sell at the highs and buy back at the lows, as far as using yield goes, it doesn't necessarily change that much relatively. 



![image.png](https://files.peakd.com/file/peakd-hive/tarazkp/23tbMYgfzGixRpFknX1YUwzzCssy68WBhJS2GqszariaweYUQYJ45VVpidHxbM5WRhATh.png)

## Theory of Relativity

To keep it simple though, let's put $100K in there so we have some larger numbers to play with and at the higher end of the market were earning 100 dollars a day on it, but are now earning 50 dollars a day. That is quite a "pay cut" but this depends on what you do with your "salary", doesn't it? 

For example, 100 dollars worth of crypto swaps to 50 HIVE when Hive is at $2, but when HIVE is at $1 dollar, 50 dollars worth still attracts the same amount. This means that as long as there is a relative relationship of the decline - which means not much really changes, life goes on and the yield can keep stacking as it was earlier, whatever the tokens may be. As prices start to rise, there is a straight relationship to what one holds and the increasing value. 

If buying with fiat or a stable coin, it is a little different because while still relative, it can benefit from other factors, depending on when it was stored. Selling HIVE at 3 dollars into BUSD for example, pooling the BUSD to earn a yield and then buying HIVE back months or years later at the very lows is going to be even more lucrative in terms of gain. 

![IMG_20220122_133202.jpg](https://files.peakd.com/file/peakd-hive/tarazkp/23z7JHGSHThyCBHadgZBX2zveHLFwhFVf7fvETjuzyrBBBRxsYvYkWPUE7iBihkeKP6h1.jpg)

But, this obviously changes if "living off crypto" because of an individual has been using that yield for life expenses, it is gone and can not only not buy back, but it hasn't been compounding away and stacking. This means that it will not only have less capital going into the bear, but unless the person is able to supplement in other ways, they are going to have to tighten their belts or, take increasing amounts of *potential* out to use.

If the yield earned was that hundred a day and a person needed to use 30 of it to live life, they are left with 70% still to stack. However, if that yield drops 50% to 50, they still need the 30 to live, so now they are left with 40% but that is only 20 dollars now. If the drop goes to 70% the yield is now 30 a day and they are at zero. But, this is crypto and 90% might happen, so now they are earning 10 dollars on the yield, but having to take out 3x that in order to cover living costs, eating into the capital. This means that as prices increase, their increase is going to be affected and the longer the bear goes, that can become very, very costly indeed, especially since the following bull market is likely to be much larger than the one before. 

![IMG_20220122_132415.jpg](https://files.peakd.com/file/peakd-hive/tarazkp/241F71XxouJyuwprJJakjebXmFYvsKYx9nQnVPJcqoD26UTDLZXVz79N5H9jT7VYKYa1z.jpg)

When prices return to where they were when the yield was a hundred a day, that capital has been eaten away significantly and might be at 50K instead. When the next ATH comes (assuming 3x), that 50 will get to 150K, but only 50% more than where it started. However, for the person who was earning yield and not spending it, that 100K drops to 50K, but the yield is earning and compounding, as well as being used to stack other tokens. 

Using that 26% and assuming a year, this means that if originally there were "100 tokens" in there worth 1000 each, now there are "126 tokens". This means that when price is back to the same point, the yield shifts from $100 a day to $126 dollars a day and the value of the holdings has shifted from 100K to 126K. So, when the next 3x ATH arrives, the holdings are now worth 378K dollars. 

As this is crypto, this could all happen in a 2 year period, which based on the compounding, would means (calculated very simply at 26% a year for two years), that capital holding would be "158 tokens" so at the 3x high of the starting price of 1000 each, it is worth 474K. 

![IMG_20220122_133532.jpg](https://files.peakd.com/file/peakd-hive/tarazkp/243zfWcFftzPUy6QAepyU47EV4NTXEu64dMjhTqftRX4mKoUbokTGQghyHFJS1My7iAnf.jpg)

Then of course, it is also going to be affected by what is bought with those earnings. I don't mind getting some CUB and putting it into the compounding Kingdom, as well as selling a little for some SPS as I think that will do well long term (based on the opinions of others for the most part) and of course, I like to keep stacking HIVE, so I have powered up some again because there is no way I am going to be selling at these prices, so it may as well be used to earn and distribute the pool. 

![IMG_20220122_133402.jpg](https://files.peakd.com/file/peakd-hive/tarazkp/242DNoi3wPP3LmhLE5EHXefdzxoHLBnHCQ8dbZPHDDdpimebk7vzjKQDKQkfbDG4s3s2H.jpg)

I am not saying that people shouldn't use their crypto earnings and the like, but I do think that it is good to look at some of the opportunity cost and why "the rich get richer". Billionaires aside, the "normal" wealthy are able to grow their various forms of investment yield because they don't have to use what they earn, which means they can keep adding more to the capital to attract the same percentage, in larger amounts. However, they might also take some of that yield out at the highs or sell performing assets in order to buy the dips, as this is a way for them to increase that capital amount faster and for cheaper.

I am *definitely not wealthy,* but I am trying to learn from my mistakes of the past and add some lessons from others for the future. It isn't good enough to just say "BTFD" because in order to do so, resources are required. For me at least, these pools are part of that resource potential and even if they decrease in value, as long as they allow me to increase my token holdings, that is okay. They are only in a loss if sold under the price paid, but if one doesn't need to sell, why sell for a loss, especially when they are still mechanisms to aid stacking. 

I held all the way up and all the way down in 2018/19 and along that path, *earned nothing* passively at all. As the markets started moving in 2020/21, this worked out quite well still and the value increased significantly. Using some of that to diversify into LPs over the last year has allowed me to stack a bit more token and it will continue to whether it is a bear or a bull market. However, five years from now, what will the difference amount to? 

It is always painful to see the values decrease so significantly, but they are just numbers on a screen, the token volumes are still increasing on the blockchains - unless swapping them to live.

Taraz
[ Gen1: Hive ]


</div>


Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@tarazkp/it-s-all-relative-unless-you-need-to-live-off-it)