LJ Articles| 2/09/2021 | #9

An Exit Stratergy, you dont want to hear

by Lorimer Jenkins, y.at/โŒ›๐Ÿš€๐Ÿ’Ž๐Ÿ™Œ

Letโ€™s say theoretically we had printed so much currency in the last 2 years that we were moments away from the biggest hyperinflation the world has ever seen. That all major currencies were about to collapse and also bring down every single active market including crypto as a result. Governments start panicking and freeze all exchanges and some of your crypto.

What would you do ?

Hereโ€™s an idea of what I would do :

Dollar and Bitcoin

The crash of the dollar is possible, many investors are placing bets on hyper inflation in the near future. So how do we protect ourselves ? We see economists say 30 year treasury bonds are the way to go but I cant get around that tiny yield.

I still donโ€™t think the government has actually filled their plan with taxation on crypto so we could all wake up one day to a 50 percent tax for simply holding Crypto.

Hot wallet vs Cold wallet

Number 1. Cold wallets if holding assets

Centralisation is not your friend, the possibility that governments try to apply tax to users who hold crypto in CEXโ€™s is high. They could simply take a note of your name and address you supplied when you gave KYC and make a note of your Crypto holdings. Then apply a 50 percent tax for simply holding those assets, or even hold your crypto ransom until you pay.


Number 2. Decentralised stable coin

So you now have your wealth in one stable coin in a cold wallet but what stable coin do you have it in ?

Tether can freeze funds, we saw this ability they have when the Polygon Network attackers Tether balance was frozen. If governments tried to freeze savvy investorsโ€™ funds we would lose large proportions of funds. The same ability exists with USDC.

We are going to have to go the DAI route, not ideal as itโ€™s a new coin but worth a try. Dai is a decentralised stable coin that maintains a peg to 1 dollar with coins like ETH as the underlying asset. But what if that underlying asset falls ? The whole model of Dai works of insentiviation for arbitrage hunters. This model will allow that peg to stay.

Number 3. Combating inflation

So you now have all your money sitting in a cold wallet, but you are still losing money due to inflation. How do we combat this ? yields. Where do we get those yields, CEXโ€™s. But we canโ€™t use them as they will freeze our funds. Letโ€™s check out Defi Pulse,

For staking DAI we can see some pretty good returns here.

Lets say we choose to stake it with C.R.E.A.M, we could earn 8.95%.

So we now have our crypto safe from the government and also earning interest.

We now need to deal with the technicalities.

Number 4, Securing seeds

You know what I mean, get creative and donโ€™t let anyone find it.

Number 5, Crypto winter is back

We would now have our funds secure and earning decent APY, well done, your crypto is safe. You now need to sit quietly for a year and buy the dip. Donโ€™t trade or get tempted just wait until we bottom out !

by Lorimer Jenkins


Disclaimer : I am not a financial advisor these articles for education purposes, new articles released by 12pm BST every day.