So today I decided to take on a big topic that has been challenging me for some time. We are all looking to leverage growth in our portfolio size and this usually comprises of two interrelated elements.

• The Value of Crypto Held
• The Amount of Crypto Held

As yet, I have not seen anybody take this topic on and do any analysis and I guess the reason is because the calculations are daunting and it is even more an issue to present the data in an easily digestible way for those among us who are not financial experts.

Let's start with some layman's definitions

Hodling - holding currency long enough to be able to resell at a sizeable profit.

Staking - similar to hodling only the held currency earns rewards, paid in additional crypto, based on a percentage

Day Trading - leveraging holdings through regular trades (not necessarily daily despite the name) to drive up either the monetary value of the portfolio or the amount of crypto held.

The bottom line is that a successful crypto strategy has to at the very least provide a better return than the banks do (not so difficult in this day and age) and ideally a greater than inflation rate so that in real terms your money grows. A below inflationary rate always decreases the currency holder's spending power.

One of the issues for doing like for like comparisons is the necessity to standardise the approach. This kind of approach is similar to the Big Mac index which compares the relationship between earning and spending power. The Big Mac has been chosen because it is a standard product that is widely available around the world at different prices according to local market conditions. The following figures are fictionalised and serve only to illustrate the point.

Based on current exchange rates the Polish one is the cheapest when doing a direct comparison but this is the beauty of such an index. It reduces it to a comparative statistic. Now let's imagine that in Poland the average hourly rate is 15.00 PLN whereas in Britain it is £10.00. This means in fact that in real terms the Big Mac is cheaper in the UK as the worker only needs to work for 24 minutes (4/10) to be able to afford a Big Mac where as in Poland to have the same spending power the Polish worker has to work for 33 minutes (10/15). Based on this approach the figures for Italy and the USA would be very similar depending on the daily exchange rate between the EURO and USD.

Taking such a standard approach to Crypto is not so easy and I am going to use StableCoin (DAI) to attempt to do this and start with the simplest model and unusually I am going to use USD rather than GBP to avoid slight discrepancies between the USD and other fiat currencies. StableCoin like DAI and Tether are only true StableCoins if your fiat is USD.

For all examples assume you have 100 DAI and it is a four week (28 day) month

Staking.

Buy a whole load of DAI and just sit it in a wallet and let it earn passively. For simplicity calculations are straight line, but in reality interest will compound.

Coinbase offers 2% APY = 2 DAI a year, or a return of 0.153425 DAI per month

Celsius offers 10.51%* APY (non-US) = 10.51 DAI a year or a return of 0.806247 per month

* rate checked on 18 January 2021

Celsius' rate is above inflation and meets the bottom line definition of success.

Day Trading

I am basing this on actual results based on my trading margins between 1st January and 18th January (morning only) extrapolating the data so it represents both 100 DAI and a full 28 day period. This has been achieved through DAI pairing and taking profits where and when possible. The same DAI has been rotated round and round to generate profits.

In the 18 days through 22 DAI paired trades, I have added an additional 32.97 DAI per 100 DAI to my portfolio which also means 32.97% or 16.5 times more than Coinbase staking or 3 times more than Celsius staking for the whole year and that is even before making it 28 days as a comparison.

To do this I take the 32.97 and divide it by 18 and multiply it by 28. The result is 51.287 DAI (%) per 100 DAI invested.

Now that is a nice problem to have!!!

This method is hard work and requires a lot of monitoring.

Hodling

It is much more difficult to hodl  and especially if you are impatient like me. I want my money to work so I work my money. I am not the world's greatest hodler so I can present two scenarios for you.

• If you had bought BitCoin around 5 September it would have cost c. $10,000 per coin if you had sold it ten days ago it would have yielded c $40,000 or a 400% profit.
• If like I did, you bought Cosmos in late August it would still based on today's figures still only be worth 67% of what it was then. I am still hodling it and the best thing I can say is that at least it is staking at 5%.

Conclusion

So based on these figures, hodling can definitely be the most profitable, but it is also the most risky. Compare BitCoin's fortunes to those of COSMOS. Celsius staking is steady and in StableCoin you will never lose, but its returns, while above inflationary, are not electrifying. DAI pairing is potentially very lucrative (in fact I was shocked when I compiled the data, but I shouldn't have been surprised after seeing the accelerated growth I have experienced this month).

By consolidating in DAI it ensures their are no losses (at least in terms of USD)

Hope you enjoyed reading. Stay safe and stay well.