Hey folks, I’m just putting out a disclaimer right off the bat that I know there’s a lot of elephant.money fans out there, and that this piece might ruffle some feathers. So please know that I am not a financial advisor, and I’m just a guy on the internet giving his personal observations and takes of Elephant Money’s new product, “Futures.”
I promise that I really don’t have anything against elephant.money, and my sole purpose here is to highlight some of the observations and risks that are out there with similar projects that we’ve seen in the past — that and the personal reasons for why I have chosen not to invest any money into Futures myself. And to be as balanced as I can possibly be, I’m going to include some of the significant positive things I’ve seen Elephant Money founder "BankTeller" and the rest of the elephant.money crew do extremely well.
Regardless of whatever you take from this article, if you’re currently investing in elephant.money, I sincerely hope that it’s truly profitable, that my fears are completely warranted, and that later in hindsight, you’ll just look at this as another horribly written article by another amateur writer.
Anyways, let’s get into it shall we?
What is Elephant Money?
Gaining great popularity from late 2021 to early 2022, elephant.money’s claim to fame was their 205% APR returns on their native and partially collateralized stablecoin $TRUNK.
In a nutshell, $TRUNK is/was 75% backed by BUSD, the other 25% by the $ELEPHANT token which in my book, makes $TRUNK a partial altcoin, or maybe a partially-collateralized stablecoin. For those unfamiliar with the effect of buy and sell pressures, once a new user bonds new $TRUNK, 25% of the funds are used to buy $ELEPHANT, thus creating buy pressure for the $ELEPHANT token. During the tail of the last bull market, things were going swimmingly until April 2022, when $11 million dollars worth of liquidity was drained after “hackers used a price manipulation attack to exploit the platform.” Despite the team’s better efforts, the price of $TRUNK completely collapsed with the bottom falling out to the price of around $0.16, which is similar to the price we see today:
From what I gathered, BankTeller and the rest of the Elephant Money team did everything that they were supposed to do — they had gotten 2 different audits prior to the attack both in 3/2021 and 11/2021 (with the latter passing on all accounts), and more importantly since the collapse they‘ve been continuing to try to build in order to make their users and platform whole. Since $TRUNK’s collapse they’ve built out multiple new features, including Elephant Money Farms, Farmers’ Depot, and now the newest release — Futures.
Elephant Futures
There’s quite a few moving parts with Elephant Money as a whole, but for the purposes of this article and for simplicity’s sake, I’m going to try my best to simply stick with Futures — a “high yield cashflow engine” which allows users to gain a fixed 0.5% daily ROI on their deposits on $BUSD.
Instead of putting your money into a collapsed stablecoin such as $TRUNK, Futures is significantly more enticing because you not only deposit $BUSD into the platform, but you get $BUSD as rewards, thus omitting the exposure into any altcoins. For the specifics about how Futures work, they have it detailed out on their site:
There’s a few caveats that are not listed out in the above list:
- If you decide to claim your rewards instead of compound, then the amount claimed gets directly deducted from your original balance. Therefore if your goal is to build wealth, it’s a moot point to claim every day because you’ll just be draining your original balance.
- If you decide to compound your rewards, you can only do so with at least a fresh $200 BUSD deposit. To clarify, your balance will autocompound but because your claimed rewards come out of your balance, you will only be able to replenish your balance by putting in at least another $200 deposit.
- The actual yield comes out of the BUSD Buffer pool first, and then afterwards is provided by the Elephant Treasury
There’s a lot of gamification involved
I haven’t checked the numbers myself, but from the statistics given from a recent James Pelton AMA, Bankteller said that if you’re inactive and just compound rewards, you’ll earn approximately 182% APR, or you can maximize your returns with different “active participation” strategies by depositing/claiming at varying intervals and get something closer to the 400–500% APR range.
I’ve seen a lot of material of how people are strategizing to make the most optimal returns, with many tools such as from one influencer CryptoStu who lays out perhaps the most popular strategies which allows you to get an ROI in roughly 400–800 days while at the same time generating very impressive balances:
According to the graphic above, a user could initially deposit $10,000 dollars and after a 778-day strategy including depositing/claiming, they could not only fully claimed out their initial deposit, but they could also have a balance of $500,000. To simplify this even further, going back to BankTeller’s APR’s, at a rate of 182% APR over the course of 1 year you could turn $10,000 dollars into $28,200 dollars, and at a rate of 500% APR, you would be able to turn $10,000 dollars into $28,200.
Pretty awesome right? Money printer going Brrrr?
Alarm Bells Should be going off
First let me say that I am not a dev and I don’t really know the first thing about smart contracts. Also, I have no reason to doubt that Elephant Money’s smart contracts work just as the team says they will work, and I also have no reason to believe that the team is planning on doing a rug or running away. In fact, from what I’ve seen from BankTeller, I actually believe in the exact opposite — he’s stuck around and has been present throughout the depths of the bear market continuing to build. Maybe I’m not a perfect judge of character, but I genuinely believe that he is out there trying to do the right thing by his community.
All this being said, there are still quite a few alarm bells that are ringing for me:
▹The yield has to come from somewhere, and…it sounds like it just comes from other users. Out of all the articles I’ve read or the videos I’ve seen, I have yet to see something that details exactly how all of this yield actually is being generated besides the fact that is coming from other depositors. (OK, so maybe it’s partly coming from LPs, but I don’t know any LPs that are making returns that high for that long, without diluting the crap out of the token.) To clarify, I have no other reason to believe that the majority of yields are coming from either at the literal expense of new depositors or else it’s coming from the people (or the protocol) buying into the $ELEPHANT token, which in essence, only gets its liquidity from new depositors/buyers as well. Someone please correct me if I'm wrong, but this means that at the very least, there’s an element of ponzinomics.
And look, if you’re argument is… “isn’t everything a ponzi?” or… isn’t the US dollar is a ponzi!? — I’m not going to argue with you, because sure, there hasn’t been a gold standard on the greenback since the 70’s so I don’t know what’s propping the US dollar now except maybe…soft or hard power? Regardless, if you can agree with me on a basic level that there are some ponzinomics at play, then please agree with me that those new depositors should be made 100% aware that they are someone’s exit liquidity and in the worst case, they might be the ones left holding the bag.
Instead, what worries me is that new investors aren’t being told this. Instead, they’re being inundated with messages like these:
And being a content creator myself, I’m not here to hate on youtubers or anything — for in the middle of the bull market, I myself was blinded by the bright shining light of astronomically high returns, and I was even telling close friends and family about some of the crazy returns I was making with different protocols…all who have either now rugged, got exploited, or simply just failed. At the time, I genuinely believed (or at least wanted to believe) that the golden goose had finally been discovered.
▹Utility, buybacks, burns — all don’t really mean $h!t if no one has faith in it, especially if it’s a smallcap coin that really doesn’t do a whole lot but helps parlay price manipulation.
Let’s play a game. There’s two different tokens — one with a FDV marketcap of almost $700 million, the other with a FDV of about $125 million.
Now — guess which one is $ELEPHANT, and guess which one is $FTT.
$FTT, the failed exchange token for the failed platform $FTX, has an FDV marketcap that is nearly 5x’s greater than that of $ELEPHANT, and these are the valuations as of today, not when $FTT was trading at 25x’s more than its value last spring.
What’s my point here? The $FTT token had utility, it had buy and burn mechanisms for price control, it was VC-backed (and arguably government backed), had a doxxed team, had audits, and had compliance officers. Even with all those safety controls in place, I would argue that the big reason why $FTT went from a $7 billion marketcap down to is $700 million marketcap was due to an extremely negative market sentiment. In other words, consumers got scared and started a massive selloff which caused the price of $FTT to pretty much crash overnight — all despite several efforts to try to hold back the flood of selling pressure:
Arguably if the FUD had never occurred, there would have been no massive selloffs, and none of the fraud and illegal underpinnings would have been exposed.
If this could happen to a $7 billion marketcap coin, I believe that this could definitely happen to $ELEPHANT. If there’s enough fear and if there’s no real collateralization, in this current market climate the only thing needed to create a massive crash…might be a single tweet:
CZ’s tweet (above) essentially struck the match that lead to FTX’s death — a multi-billion dollar company who filed for bankruptcy within just 5 days.
And one more added note — if you still think the Elephant Treasury is the iron fail-safe that’s going to protect people, just keep in mind that Do Kwon spent nearly $3 Billion dollars worth of $BTC to try to defend the peg of $UST and failed. By slim comparison, the Elephant Treasury is currently worth $13.6 million dollars:
$BTC is the premier bluechip cryptocurrency, and it was also completely useless in beating back the tide of fudders and sell-offs in UST/LUNA’s collapse. If $BTC couldn’t do it, could a relative microcap altcoin?
▹Something works…until it doesn’t. Speaking of Do Kwon, besides losing money in FTX, I’ve also lost money in Terraluna, and before that I lost money in Time Wonderland. Both projects made some pretty crazy returns, and both collapsed in days if not hours.
Assuming that Elephant Futures is supported by either game theory or ponzinomics, its sustainability requires that people continue to hold their funds long term/and or continue to put money into the system. By simple math (BUSD-in/BUSD-out), if enough people pull out enough money in a short enough period of time, someone is going to be left holding the bag (or maybe technically a bag of $h!tcoins). In other words, if liquidity dries up, people who try to withdraw BUSD are screwed because they won’t be able to withdraw or else what is perhaps more likely — people investing into the $ELEPHANT token are going to get screwed because the price is going to crash with all of the Elephant Treasury’s selling pressure. The counterargument that BankTeller stated in James Pelton’s AMA was that this was unlikely to happen because different people have different strategies. While this may be true, no entity in the cryptospace is impervious to FUD, just as we’ve seen billions of dollars drain out of Binance in a matter of days.
Regardless of how it happens, it can happen stupidly fast. I read about so many people who came to read the news about the $LUNA crash just a day late, only to find themselves completely rekt:
Therefore when BankTeller and other influencers say that the most optimal strategy includes “active participation,” I whole heartedly agree — neglecting your Futures deposits for just a few days, might make you the last person in line trying to get your moneyback. And speaking of participation and time, this leads me to my next and final point…
▹Unless it’s in cold storage, I’m not willing to put huge sums of money anywhere, and this includes even “safer” options including Crypto IRAs. If you’re curious as to why, check out my article about risks of Crypto IRAs.
With how the rife the crypto space is with bad actors, even if your funds don’t get rugged, you could still be a victim of a hack or a smart contract exploit. Referring back to Crypto Stu’s strategies, considering how risky the space is, I would feel very uncomfortable holding my funds on Elephant Money for multiple years, no matter how much crazy money I could be earning. The only platform I could possibly trust for that long is….I dunno, maybe MakerDAO?
Conclusion:
I know that this was a long one, and if you’ve read through all of this and still think it’s worth the risks in order to potentially turn $10,000 dollars into half a million in less than 2.5 years, by all means Kenny Rogers, I hope you really do know when to hold them.
My time in cryptocurrency has made me more skeptical than ever, and although I spent quite a few hours listening to interviews and reading articles on Elephant Money Futures, I will also be the first person to admit that I am completely capable of being wrong, and I know this because I have certainly been wrong several times in the past.
All this being said, if you have any evidence or information that points the contrary to anything I’ve stated in the article, I would appreciate you letting me know in the comments below.
Thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!
