5 Crypto Investment Failures of Mine Analyzed
By: Christopher Schmaeche
Tags: Mistakes, Binance Smart Chain, Cryptocurrency, Reward Token

Created by author, background taken from poocoin.app

I invested in several coins I found on r/CryptoMoonShots and I want to share with you how 5 of them turned out for me.

Admittedly, it would seem a bit early to look at the performance of those coin. Given that I hold none of them for longer than a month. Some more diamond handing might be all it takes for them to go to space.

Yet, I can already say that I made a lot of mistakes and learned tremendously. In hopes to keep you from making the same mistakes and to paint you a picture that is not as rosy as all those Reddit threads and telegram groups want you to believe, I am writing this article.

All coins have in common that they reward their holders. The concept convinced me instantly. Buy a coin once and benefit from all buys and sells. Wait long enough and you are bound to break even, right?

I plan to write a more nuanced article about reward coins in the future, so I do not want to answer this question in detail now. A simple “It is not as rosy as it seems” must suffice for now. But I think that the stories I am about to tell will speak for themselves.

The order of the 5 coins corresponds to the order I was buying them. You will see that my willingness to spent money increased but not the scrutiny of my investments.

The approach here will be identical for all of them. After a brief introduction will come an analysis of the current state of the social media following. Mainly represented by their Twitter and Telegram.

Next will be a closer look at the Tokenomics followed by the accounting of my position. How much did I spent? How much is it worth at the time of writing? Did I get rich through the rewards?

Note that I will ignore gas fees in my calculations and will give rounded values without always mentioning it. All for the sake of simplicity.

All is topped of with the tokens chart that will show when I got in and where I currently am or in some cases: where I got out.

It all started with a $Cake reward token. I was instantly hooked because PancakeSwap is one of my favorite Dex. So how could I resist the promise of even more $Cake.

Social Media

The Twitter account has 10k followers and the last post was written on the 10th of August.

The Telegram group has 3k members with hardly any activity. The only activity that is going are proclamations of how dead this coin is.

Tokenomics

There is a 15% tax on every transaction. 8% is distributed as $Cake rewards to holders, 4% is used to provide liquidity and 5% for marketing. I know this does not add up, but this is actually taken from the website.

A minimum of 200'000 tokens have to be held in order to be eligible for the rewards and a wallet cannot hold more than 1.5% of the total token amount.

My Account

I bought tokens worth 23$ which are currently worth 3$. Selling my share was not profitable because the gas fees were higher when I tried it.

According to the dashboard I earned 0.43 $Cake which is currently worth 10.69$.

This puts me at a loss of 53%. We are up to a good start.

Taken from poocoin.app

This token rewards even two tokens, $AXS and $DPET. This peeked my interest because I was very aware of how successful $AXS was (and still is). I even wanted to get started with Axis Infinity myself but was turned off by the initial investment necessary.

Social Media

The Twitter account has a stunning 100 followers. No wait, it has less then that. The Telegram group is comparable in size and activity. 500 members most of which are probably tumbleweed because that is the vibe you get when checking it out.

Tokenomics

The details on the Tokenomics are as scarce as the rewards I eventually got from it.

We have again 15% tax with 5% turned into $AXS and another 5% into $DPET. 3% goes to the devs and marketing and lastly 2% are used for liquidity.

A white paper with further information is sorely missed and the lack thereof should have been a red flag. Hindsight is always 20/20, I guess.

My Account

It all started with a buy worth 23$. I vaguely remember being impressed with the rewards after the first day. Could be that I made 10% of my initial investment. But the details are blurry to me by now.

Long story short, the next day I decided to throw another 33$ into the ring. Totaling to 56$.

How stunning were my rewards? So stunning that I sit here shaking my head over the fact that I bought more coins because of them. I received 0.281 $DPET and 0.0455 $AXS which would today be worth 1.38$ and 3.39$.

Once I realized how dead this coin was, I traded it in for another one I just randomly found on poocoin. By now I am pretty sure that this other coin is a scam.

But this is a different story filled with naivité and stupidité I would like to postpone to … never.

Bottom line: I can register a yaw dropping loss of 91%.

Taken from poocoin.app

BNBack

The sheer thought of constantly gaining BNB that could be used to pay the gas fees of other transactions hooked me instantly.

So, do I now get BNB for life? Enough to pay for all transactions?

Let’s find out.

Social Media

The Twitter account with 3.3k followers has gone silent since the 13th of August.

The Telegram group has around 3.3k members as well and as if it was trying to imitate the Twitter account also predominantly presents silence.

Starting to see a pattern here?

Tokenomics

Also no surprise on the Tokenomics front. We have a 15% tax on every buy of which 10% go towards BNB dividends, 3% are used for marketing and 2% for liquidity and buyback.

Noteworthy here is a higher sell tax of 20% to make sells less profitable and to prevent dumps.

My Account

My initial enthusiasm is reflected in the amount I invested. I put 50$ on the table. Currently my position is worth a mind boggling 0.5$. Yes, you read right! 50 Cents.

Amazing!

The chart clearly shows that the higher sell tax did not hold off people from selling… probably to leave the sinking ship.

Does this mean this coin records losses that are even bigger than the previous one?

To my own amazement this is not the case, because my investigation revealed that I was rewarded with 0.0437 BNB which is actually worth around 21$. I was actually so surprised by this number that I had to double checked it. Only to get the same result.

With that I am at a loss of 58%.

Taken from poocoin.app

Ah yes, Daddy Cake. I will always remember you. Not for your stellar performance.

No! Simply because you were the first coin I invested in where I experienced “the crash” first hand.

In case of the previous coins, it took me quite some time to realize that they are dead.

Looking at the charts gave me a hunch but in the course of this article I found more compelling evidence. Like everyone in Telegram saying that it is dead, for example. Pretty compelling, if you ask me.

But with Daddy Cake, it played out differently. I was an active member of the Telegram group and thoroughly enjoyed the community.

We were posting memes all the time, strengthening each others belief that this is a strong investment. People selling were labeled as “paper hands” who we scoffed at.

We were “diamond hands”. We held on to this coin through thick and thin. Convinced that enough perseverance is all it takes and you will be rewarded with a journey to the moon.

It was a morning like any other when it happened. I wanted to check on my brothers in arms. This would turn out to be unlike any other morning. The group was renamed to “This failed”. Which is a bit theatrical, if you ask me.

Not only was it renamed, it was also closed. No contact to my fellow investors was possible. To put insult to injury, one of the last messages was the price bot showing the current chart. It showed off one massive red candle and the total collapse of the price.

Social media & Tokenomics

I was just talking at lengths about the Telegram group that had 12k members in its prime.

The website has been taken of the net, giving me a hard time to find the Twitter account as well as the tokenomics. So I am going to make it brief for this coin.

There was a 15% buy and a 22% sell tax. The token distribution and further specifics will forever be lost … is another way of saying that I am too lazy and to hurt to investigate this token any more.

My Account

I believed in this coin, firmly. This explains the three buys I did. 62$, 41$ and stunning 3.15$. The last transaction was me converting my $AXS from before.

10$ was what I got out of it when I liquidated my position which in total rewarded me with 0.56 Cake. That would be around 12$ today.

All in all I am left with an 80% loss and a broken heart.

Taken from poocoin.app

Last but not least, we have a project that I would consider to be not a complete failure because it is still active. Money is still spent on marketing and I regularly see adds on Poocoin and other sites.

The team behind it is creating an entire ecosystem of reward tokens centered around their own coin, Thoreum.

The constant evolution of their ecosystem could be beneficial for ThunderBNB or it could mean that the old reward tokens will drift off in oblivion and the only token that really benefits is their own creation.

Time will tell …

Social Media

It should come as no surprise that their constant activity results in an active social media following. 36k followers on Twitter and posts every day, mostly about the new tokens. Joined by a Telegram group that has 85k members.

Mind blowing!

If it were not for the fact that most seem to be fake. At least the activity in the group itself does not feel like 85k members.

Tokenomics

We have a staggering 18% buy tax which is split into 8% BNB rewards, 2% Thoreum rewards, 2% burn of Thundercake (another one of their creations), 2% buyback and burn of Thunderbnb, 4% marketing and dev fund.

The sell fee is 1.5 times the buy fee, which lifts it up to 27%.

But that is not all. On top of that a whole zoo of vaults and pools are available where you can stake your coins, mine new ones and earn rewards. It is challenging to keep track of all these choices.

To be completely honest, I have lost said track.

You probably think that this is all and I do not blame you. What could possibly come after all of this?

Well … just one word. LAMBO!

I can sense your confusion even while I am typing this. Yes, you have the chance to win a Lamborghini Huracan just by hodling Thoreum in your wallet and not transferring it anywhere else.

These guys sure know how to do marketing.

My Account

The flashy website and last but not least the chance to win a lambo must have blown me away. Why else would I have spent 280$ on this.

Because of the incredible potential the coin has? My position is at 82$ according to their own dashboard right now.

Because of the constant stream of rewards I receive? The same dashboard says my total rewards add up to 20$.

So far a 64% loss.

Guess it was the lambo that convinced me after all.

Taken from poocoin.app

Conclusion

You might be amazed but the intent of this article goes beyond humoring you. I want to deduce learnings from these mistakes. Of course also for you, but first and foremost for myself.

And I have learned a lot. I could probably write and article about each lesson itself. So I have a proposal for you: I will give a high level summary of the points and you will make sure to check back in the future to read the detailed article. Deal? Deal!

Commence the learning!

Never skip research day

Who would have thought that buying a coin simply because one guy on the internet said it would go x1000 is a recipe for disaster? Unless that guy is me, than it is cool!

Here is a list of questions that you should try to answer before investing. Just to be sure, this list is far from complete and should only be considered as a starting point. Also, the points mentioned should not be seen as a necessity. Just factors that reduce risk.

Which problem is the coin trying to solve and are there other similar coins?

Who is the team behind it? Have they done other projects? Is their identity known?

Has the project been audited and what was the result?

What does the website look like? Has effort been put into it or is it full of typos?

What does the white paper look like?

How many holders are there currently? What is the biggest position being held?

How much liquidity is available?

Social media presence is important

I once read, and I think it was in the book ‘Blockchain: Bubble or Revolution’ by Mehta, Agashe and Detroja, something along the following lines:

The value of a currency is determined by three factors:

inherent value, e.g gold and turning it into jewelry

utility, e.g being able to buy food

hype

Crypto currencies have no inherent value due to their intangible, digital nature. All just code and numbers somewhere on the internet.

They can have utility though. Heck, I could order a pizza with Bitcoin. Even though that is not new. But most coins, especially very small ones, lack utility.

In case of reward tokens, I would like to question whether being a reward token is utility, because it is bound to so many conditions in my opinion. But that is definitely something for another article.

This basically leaves hype to be the major force behind value generation. Thus, the question is how much hype the coin and the team behind it can generate. That is the reason why the social media presence is so important.

Here, again, a couple of questions:

Which social media channels are available? How many followers are in there?

How active is the community?

More importantly: How active are the devs?

Do they post regularly?

Do they spent money on marketing?

Do they invest in ads or giveaways?

Do they hold AMAs?

Hodling is not always the way

Here is the funny part. For 3 out of 5 investments I actually entered at a favorable time. Because after I bought them, they went up. Some of them even significantly, I would like to say.

Had I sold some portion of my position, I would have come out of it with zero loss or, dare I say, even some profit.

But I did not do it. I did not even consider doing it!

See, in the non-crypto financial world, I am a big fan of buy and hold. Which means to buy something and hold onto it no matter what is happening on the market. This is usually done with ETFs.

It was only naturally for me to gravitate towards “diamond handing” when it came to crypto investments. I happily joined the other hodlers in mocking sellers as “paper hands”. It gave a feeling of unity and superiority.

But strict black and white thinking seems to be dangerous when it comes to crypto. Buy & Hold works well for an index fund that will eventually recover from a crash but a single nano cap coin usually burns after a crash.

We have nothing to fear but fear (of missing out) itself

FOMO or fear of missing out is the worst enemy of any investor.

An important lesson to get into my stubborn head is that I will not be able to participate in every moon coin. And that is okay! There is no reason for me to chase every opportunity.

Fear will only lead to hasty decisions that mostly lead to one thing: Red numbers.

A focused and cool-headed approach seems to be way more promising to me.

Final words

If there is one thing writing this article taught me, then it is caution.

I kinda got burned on my first couple investments and my initial flaming enthusiasm got cooled off considerably but me eagerness to further learn about crypto has not ceased at all.

This article turned out to be a lot longer than I expected. To everyone who made it to this point, I want to say: Thank you.

I really hope you enjoyed this article and maybe even learned something. Feel free to share in the comments one of your beginner loss stories.

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