Honestly, if you can just avoid the scams and unethical shit in crypto, that's how you win — not by finding the next 100X coin. Just grab good projects at a good price, hold them, and avoid the millions of assholes trying to take it from you.
I've noticed a hugely unethical trend in yield farms everywhere lately — they are not being truthful to you about the returns you're getting. This untruthfulness falls into 3 categories:
1. Confusing APY with APR (purposefully or unpurposefully, who knows)
2. Showcasing tomorrow's results as today's returns
3. Straight up lying about emissions
I don't waste time trying to determine the intent of pseudo-anonymous developers in an unregulated market. Whether the devs mean to lie to you or just made a mistake doesn't matter to me. You'll never know, honestly. Only thing that matters is what you get for helping them test their protocols. And it is a job, and you should get paid for it. Yield farming is the only fuckin job where you can go to fuckin work and end up with less money than you left the house with. These motherfuckers should be more forthcoming, but they're not. You gotta watch yourself.
Confusing APY with APR
APY and APR are two different things. APR is the only calculation you should be worried about. Why? You won't be in any of these yield farms long enough for APY to matter. The difference:
APY is your returns on a farm if you compound, usually on a daily basis. APR represents what you get if you don't compound. If you're not compounding, you're holding or selling, which is what you probably should be doing with these unproven shitcoins.
If you do conversions from APY to APR, you'll see how misleading APY can be. For instance, a 10,000% APY that's compounded daily equates with a 464% APR. The nature of compound interest is that most of it happens at the end. If you stay in the pool for a year, you'll get that 10,000% — but only if the number of people in the pool stays the same, the price of the shitcoin stays the same, and the devs decide not to reduce emissions. Protip: This will happen exactly 0% of the time.
I can't count the number of yield farms that showcase APY for no damn reason because yield percentages are variable (they only go down over time), and you won't be in the farm that long unless you're a dumbass. So if you see APY on any yield farm, do the APR calculation and be careful because the devs might be unethical (unethical = not a 100% scam or rugpull but still cheating you).
Showcasing Tomorrow's Results as Today's Returns
Quickswap is the biggest culprit I've seen, so watch yourself on their yield farms. Most especially their new shit with the 5-digit APwhatevers. Their scumminess relies on conflating the rewards APY and the fee APY, which can really inflate numbers.
You get two yields from yield farms, the rewards and the fee. The rewards come from the counter you see moving up in real time. The fee rewards you don't see. These are the rewards from swaps of the two coins. They are usually turned back into LPs and added to the total LPs you have. Some protocols don't add these LPs to your visual total until you withdraw. Some do. Practically, it doesn't matter because fee APYs are even more inflated than rewards APYs. Here's why.
Fees only occur when people actually trade between the two coins in the yield farm. The highest amount of activity usually occurs during a project's launch or after a hack/negative event. The fees will be really high that day, but they will be far lower on normal days. However, the protocol may choose to showcase the APY at its highest point as if that yield will continue. Keep in mind that the APY also includes the normal APY balloon of showcasing tomorrow's compounding as today's return. So you've got two unfair balloonings of the number that will hugely affect your real returns because again, if you stay in a pool long enough to get the full APY, you can almost guarantee you'll end up in the negative because of the capital losses in shitcoins or impermanent loss in blue chips.
An example of this: Go to Wault Finance's farms and look at the WEX-USDT farm. You'll see a "Boosted" tag by it with an APR around 900%. They were at least honest enough to put the real stats in the information tag, so click on the small "i" by the number. You'll see that a sizeable percentage of the total APR comes from the fee APR. Why? Wault just got flash loan attacked and lost a bunch of money, so a bunch of people sold out of Wault. That fee APR is not really a boost — it's a natural response to folks running away from the protocol. That APR won't stay there long, and it won't accumulate the like farm APR. Wault doesn't show any changes in your LP total, so they could just be lying about it. So basically, it's an unethical way to keep people in the protocol by making them think they're getting a deal if they get in right after the hack. There may be some benefit, but only if the WEX token appreciates. So you should only get into this farm if you think the WEX shitcoin will come back from its dump.
Straight Up Lying
There are some platforms that just lie like Polydex on Polygon (there are two; I'm talking about the Cryption Network project with the CNT token). The amount of money you get simply does not match the emissions stated on-screen, and no amount of finagling I did was able to match the two. I can only assume these devs are just lying to you so you'll keep your high-value coins on their possibly shitty platform.
Bottom line: Use an APY-2-APR calculator and just do the back-of-the-napkin calculations before trusting any emissions data you see on-screen. As crypto matures, you can expect the returns to quickly fall. This time next year, mark my words, we'll be in an environment where the average yield farm won't be much better than banks unless you go ridiculously far out on the yield curve. Crypto as a whole has not solved the problem of diminishing returns. It's still a system based on inflation bar a few projects like bitcoin, and the rules of that system and philosophy still apply.
To be clear: I'm not by any means advocating outside regulation on crypto because of this. Banks do the same damn thing even with their little 0.2% APY. You do those calculations and your APR for dealing with them is even lower! I'm advocating financial education for everyone and more financial responsibility at the individual and familial level. Banks cheat; regulators cheat; everybody cheats. The only investors who win regardless of the space are the folks who fully understand the game and avoid the pitfalls of the godless cheaters.
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