A Deep Dive Analysis on Yield Nodes - My Only Green in a Red Market


Hi everyone, as a reminder I am not a financial advisor and the following is for entertainment and educational purposes only. As always, please do your own research and find what investment might be best for you. Additionally this is a follow-up of my initial article on Yield Nodes that I wrote a couple of months ago, so if you'd like to track my initial thoughts and why I initially looking into it in the first place, I highly suggest that you take a look at that first. 

Yield Nodes

It seems that every market is down right now, and as I've mentioned before in previous articles, in order to support long-term sustainability in a bleeding market, many projects including Crypto.com and Anchor Protocol are in the midst of reducing yield rates in order to try to remain solvent. Despite the slight market pump that we saw after the FOMC announcement a last week, the market appears to continue to slide downwards, and I've been reading that they may continue to do so at least for the next few weeks, if not the next few months. However, despite the market downturn, I was excited to see my first monthly earnings report from my Yield Nodes account, and I was impressed to see that the returns were un-phased by the significantly negative market conditions. However as excited as I was to be making money, I also grew equally skeptical. It seemed a bit too good to be true, because if they could do it...well why wasn't everyone just doing the same thing? 

Thus, this sent me down a bit of a rabbithole (or I guess several different rabbitholes), looking into details of the different projects that they are invested in, which as the name suggests are mostly masternodes:

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From a glance you can tell that there's several, and for practical purposes even though I did look into most of the them, I'm only going to point at some of the interesting trends and factors that I found about them, which will hopefully help point to how they're able to maintain and generate consistent revenue. 

Overall Project Trends :

First, I know all the bloggers and youtubers out there talking will talk about Yield Nodes as it's own singular thing, but learning more about these projects, I have learned to see Yield Nodes as sort of a fund manager that is exposed to a lot of different masternode projects, more specifically masternodes involved with the Decenomy ecosystem. I won't get into the weeds too much about Decenomy as a company itself, but what I will say for the purposes of simplicity, is that Yield Nodes' masternodes are actually Decenomy's masternodes. In other words, Yield Nodes is simply the fund manager that will help you host Decenomy masternodes. In fact if you didn't want exposure to all of the different node projects, you could actually pick and choose your own decenomy node to spin up yourself. But in a nutshell, the Yield Nodes and Decenomy folks are symbiotically entwined, and they are both based out of Malta. 

Yield Nodes/Decenomy also owns or at least has a big stake in its masternoding projects. The way I see it, the symbiosis of these different node projects can either add collective strength or they can add increased risk. In fact, the more I read about Yield Nodes, the more I felt that I was reading about Amazon, or at least Yield Nodes as the Amazon of masternodes. If you've read about the news on Amazon's last earning's report, essentially they took a huge hit with one of their investments--Rivian. Not to say that this will happen to Yield Nodes, but the closer you tie your fate with other projects, one tide will raise all ships...or sink them.

And also like Amazon, they've really taken control of the whole production process and even own/operate their own decentralized exchange, Helio Bank. and their own trading platform through Birake. As Yield Nodes has garnered more success, it's clear that they're continuing to build out to make things more efficient and to take control and minimize their risks.

Speaking of controls, if you look up any of the tokens associated with Yield Nodes project, you'll notice that they're pretty controlled in accessibility--you can only get many of the tokens on just a few exchanges, Birake being one of them. SAPP, which could be considered Yield Nodes' flagship project, is listed on only 4 different exchanges, and it's perhaps the most accessible:

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This is the case for most of the different Yield Nodes projects. Go look up any on coinmarketcap and you'll find that most of the tokens out of the 20-or-so projects are listed on one or maybe two same exchanges. In addition, these are all super low marketcap coins with SAPP topping out at barely around 250th. But what's even more amazing, is that considering their small marketcaps, all these super low marketcap coins are actually pretty stable. Take a look at DASHD's 3 month chart for instance:

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Considering how volatile the market has been, in my opinion this looks pretty damn stable for a coin that's ranked 3423rd, and this is pretty consistent across the board with all of their masternode tokens. 

And lastly, it appears the Nodes Have Utility - The projects Yield Nodes are involved in are not NAAS Nodes (Nodes as a service), but instead masternodes that have a practical purpose besides pumping out tokens . Generally most of the masternodes are part of proof-of-stake blockchains that are tracking monetary transactions. Based on their utility and the fact that the relative tokens are somewhat in an enclosed ecosystem (more details below), it makes sense that their price action might be less tethered with traditional crypto markets. 

Other Considerations:

 

The 6-month Lock-up

Whatever you deposit will get locked up for six months. You can do a emergency withdrawal fee to break out of the 6-month lock-up, but that will incur a 25% charge. I imagine that the reason why they ask for a lock-up is because there's a lot of costs usually associated with running a node--and many of Decenomy's nodes are no different. For instance, to run a Sapphire masternode, it's roughly $118,000 dollars. If you deposit $50,000 and that goes into spinning up a new node, that means that if you decided to pull your deposit out quickly, then Yield Nodes would have to immediately reallocate $50,000 towards that node less it fails. This is also probably the same reason why there's a 7-day grace period after you deposit your funds before you start accruing interest--they need time in order to allocate your funds to whatever nodes they are running. 

On the other hand, your profits can be withdrawn prior to the 6-months, but these too are not instantaneous. If you're looking to cash out your profits, you need to request to do so by the 15th of the current month, and then subsequently you will be paid out by the 8th of the next month. Similar to the other time lags, I imagine that this is to promote stability by being able to accurately forecast funds needed to maintain current masternodes. 

Depositing/Withdrawing

Another thing worth mentioning is that they have a 500 euro minimum and a 250,000 euro maximum deposit. What's interesting about this is that this is the only project I know that has a maximum limit for depositing. Watching a few of their interviews however, it doesn't come as much of a surprise because I've noticed a general theme that they are cautious about scaling and wanting the project (and profits) to be sustainable long term. In other words, they probably don't want to handicap themselves by growing too quickly with all the liquidity concentrated in just a handful of accounts , thus increasing the chance for a whale-pullout collapse. I also assume that this might be aided in the fact that they require KYC so you can't open 20 different accounts. 

And I keep saying euros, but technically you would be depositing your funds via BTC or USDT. If you deposit BTC like I did, once your deposit is tracked it is essentially converted to euros so it will no longer fluctuate with the price of BTC. Likewise, whenever you withdraw, you would receive whatever equivalent amount in BTC to  Euros as well too.  I initially had some regrets because I deposited my BTC before it last pumped to 43k, but with the latest drop in price, if I were to pullout my deposit today, I essentially would have realized a gain of +20% on my BTC. The opposite case however, is that BTC could have easily gone up 20%, so I could have experienced a 20% loss. 

Audits

So I think that the biggest concern is how they do their audits. Essentially the criticism is that although they've had audits done, they haven't been "professionally" audited by the likes of companies like Certik or Trail of Bits, and instead from non-professionals and average users. Now I imagine that the reason why they haven't been audited by smart contract auditors is because Yield Nodes doesn't necessarily run its own smart contracts, but rather it functions simply as a business that's managing funds into different projects. Honestly, I think it would make more sense to have a financial auditor or a CPA look into their books instead. If a smart contract auditor were to be involved, it would be more applicable to look at specifically the different nodes that Yield Nodes runs itself. For what it's worth, the interviews and reviews from the auditors that I read, the company did just that--they opened up their books to show how many was moving in and out of projects. 

Conclusion

Out of all the articles, reddit posts and reviews that I've seen, I still have yet to find a single review of someone that has invested their money and hasn't gotten returns as-stated, or hasn't been able to withdraw their money as-stated. And not only have they continued to payout pretty stellar returns, they've done so for the last 5 weeks when BTC has been red for the past 5 weeks! This is not the first bear market that they've been able to gain profits from and I imagine that it won't be there last. 

So at this point, since I deposited my fund in mid-March, I've accrued about a month and 1-week's worth of profit. My profit posted like clockwork on May 1st, and I immediately compounded my interest. To be honest, the reason why I compounded was because at that point the price of BTC was relatively stable. Had I waited for the crash on May 5th, I would have considered withdrawing instead of compounding because for me, I think BTC is oversold and now it seems to be getting a pretty good discount. I'm not certain how long I'll be compounding for in the future, but eventually it'd be nice to effectively be able to pay off my rent with Yield Nodes, so for me, I may start withdrawing consistently in about a year's time or so, but we'll see.

If you yourself have tried Yield Nodes (or any of Decenomy's masternodes for that matter) and had some less than desirable results, I'd love to hear about it in the comments below.  And if you haven't tried out Yield Nodes but are wanting to poke around and check it out, please consider supporting me and using my referral link: https://yieldnodes.com/?a=OKe9wjw2dbXnLMr

Thanks for reading and please follow me on my new twitter account @CryptosWith: https://twitter.com/CryptosWith Happy bear hunting!

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Messin' With Cryptos
Messin' With Cryptos

I've made a ton of mistakes along the way in the world of Defi and cryptocurrency. Hopefully by taking some of the lessons learned and cues i've went through, you'll be a bit more success


Messin' around with Crypto's
Messin' around with Crypto's

Follow me on twitter! @CryptosWith https://twitter.com/CryptosWith

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