What are we looking for when we look for a project that allows us to generate passive income?

If we try to imagine how that ideal project should look like, which features and characteristics, I think the list (at least mine) should include at least the following ones:

• It should have a high APR , that is, it should pays high interests. Or what is the same: It should have a high return on investment, that is, to let us recover our initial investment in the shortest possible time.
• It should be low risk. We already know that in traditional finance, the higher the return, the higher the risk, and the lower the risk, the lower the return. In DeFi this is also true, but with so many new projects popping all the time, it's possible to find some that offers high rates with relatively low risk. Or at least, that the time needed to recover our initial is as short as possible, so as to be exposed to the implicit risk for the shortest possible time, especially when it's a new project.
• It should be easy to use and control, and not require us to constantly monitor it, such as some Farms in which the risk of impermanent loss means that we must constantly monitor the value of the assets in which we invest.

Two weeks ago (from the time of writing this article) I came across this project that was launching.

I immediately liked it because of its simplicity and its promise of high performance. I thought it was worth risking a few BUSD to see the results. This model was new to me, although it is actually a fork (with improvements) from previous projects. How does it work?

Duck Network

It's quite simple:

An amount of BUSD is invested, which will be locked forever. This feature, which is frightening at first, is definitely one of the factors that will give us security since it will not be easy for the whales to drain the contract rapidly.

The protocol will pay us a daily 4% of the amount of our locked BUSD.This process is called "Minting", that is, as for now, $DUCKs can only be minted this way.

4%? It's true? Yes and no.Could be more or could be less, depending on $DUCK's price.

The protocol will pay us 4 $DUCK for every 100 BUSD deposited every day. It represents a 4% in $DUCK, but measured in dollar value, it will depend on the value of the $DUCK. When I made my investment, 5 hours after the project was launched, one $DUCK was worth 0.19 BUSD, that is, the return was 0.76% per day (far from 4%). At the time of writing this note, the $DUCK was worth 1,197 BUSD, meaning a 4,788% daily return. Awesome!

But this is not all. We can claim and stake the $DUCK we mint, at a fixed rate of 6% daily. That is, for every 100 $DUCK, we will receive 6 $DUCK per day. In this case, yes, the rate is fixed and guaranteed at 6% daily, regardless of the value of the $DUCK.

The $DUCKs we claim as reward (either minted or from staking) can be sold at any time. But if we stake them, there will be a 7 days vesting time before we can unstake them. Besides this, there is a maximun of 40.000 $DUCK than can be sold per day.

My Strategy

So far my strategy is very simple. I made an initial deposit and am rolling over the rewards until the initial deposit is matched. At that time (less than 20 days will have elapsed) I will allocate 50% of the daily rewards to recover my initial investment, and the other 50% will be reinvested (staked) in order to increase the daily rewards. Once the initial investment has been recovered, I will continue reinvesting until I achieve the daily return I want.

Is this project sustainable?

Like any DeFi platform, we know that we are in a high risk scenario, specially if we compare it against conservative traditional finance. But the potential benefits are also infinitely higher.

I consider that this project implements some security measures that, at least in theory, make it sustainable over time. These are:

• BUSD deposits locked. This means that the contract cannot be suddenly drained, but only through the sale of the earned rewards.
• Sales are capped at $40,000 DUCK per day, so a whale cannot ditch its assets all at once causing the price to drop sharply.
• Staked $DUCKs must remain for at least 7 days before they can be withdrawn. This timer resets every time a new deposit is made.
• Total Supply capped at 1 million $DUCK.
• Minted $DUCKs (those generated as a reward from the locked BUSD) become circulating supply, and when they are sold they go back to available supply, never having more than 1 million in total. The price of $DUCK is calculated as the total of BUSD divided by the amount available.

Conclusions

In short, I think the project is interesting and can pay off very well in time. As always, if the community loses interest, the project will decline and we will have to be vigilant, but we know that in this hypothetical case, it would not be an abrupt drop. As long as we balance reinvestment with profit taking, I think it's a very good passive income option in a very short time.

Disclaimer

This article was written purely for informational purposes and in order to share opportunities that I find interesting with the community . This is not financial or investment advice, always do your own research and don't invest more than you can afford to lose.

If you found this article interesting yo may use my referral link to enter the project. It will cost you nothing.

https://ducknetwork.io?ref=0xD45b81b0300E9890f9C2BDeAd42b030DD1456714

Until next time!