Web3 Breakdowns Ep 32 - Algod: Numbers over Narratives
Primer: Algod has been vocal against scams in the space. How does he identify projects with questionable tokenomics? What is his investment playbook? He shares it with host Eric Golden in this episode of Web3 Breakdowns.
About Algod
Is his trading skills self-taught?
It’s all self-taught
His education level is high school
Have been doing research on macroeconomics
Everyone has their own idea and nobody knows what they are talking about
Helping people to avoid scams
In 2017/2018, he got hacked
Have seen people getting burnt based on misinformation
Wanted to help people realize what the game is
Forced his opinion on LUNA and help save people
“That people said I saved their life, save all their life savings and stuff. So, for me, that's definitely worth going through all the hassle.”
- Algod
A lot of LUNA people lashed out at him
Was against Olympus DAO too
On hypocrisy
Got rich because of all the stupidity happening in the market
Now that he’s rich, he really wants the world to become a better place
Realized it is hypocritical to say that
“I think we are all like a bunch of hypocrites, at least the people that made it. And now we're like advocating for better space, but I don't have anything against the people that are still trying to hustle.”
- Algod
Investing Viewpoints
Where are we in the macro landscape?
Everything is a bubble
Ray Dalio says we are at the end of a cycle and the next superpower will be China. Possible for the US to go into hyperinflation
Not sure where we going to be
His investment playbook
Always asks himself where is the money/yield coming from
If you buy a token on the secondary market, you have to take the unlock schedule into account
Tokens that are potentially eligible for protocol profits in the future
Any projects that are currently overvalued?
Not that he’s aware of
People are starting to realize that yields had to come from somewhere
How will he respond to someone in real life asking about crypto?
Would steer them away
“If they make money, they won't really think you made the money, but if you lose their money, they will hate you forever. So, I don't want to have any responsibility.”
- Algod
Investment Process
His Investment process
Mainly works solo but sometimes he shares ideas with a lot of people
The duration he holds an investment depends on the market conditions
In 2021, it was favourable to hold investments for the long-term
Now, he wouldn’t hold anything long-term
Often uses perps to trade
Metric he looked at
Market cap: Circulating supply multiplied by prices
Fully Diluted Value (FDV): The future price of the token after all tokens are unlocked
For a short-term play, the market cap is a better metric to look at and vice versa
Some people use PE ratio and TVL, but he is not sure if it’s important
The metrics that are used depend on the market cycle. Important to understand that you have to be flexible with it
Investment Positions
His cash position
95% of his crypto assets are in stablecoin and some fiat
Want to see more capitulation before deploying his cash
Willing to sacrifice some upside potential for a potentially lower buying price
Doesn’t use his stablecoins to generate yield as the smart contract risk is too high for a few % annually
Also thinks that algo stablecoin should not exist
Market cycles
We are in a global recession now
People are using models to predict future prices, but they don’t realize the landscape has changed
There’s more adoption now than in 2017
Assets he is using to diversify away from crypto
Will be researching real estate
It’s good to have your own home
What he’ll be investing over the next 6 months
GMX, a privacy-preserving scalable solution
Case Studies Of Projects
Luna/Anchor
Have been trading throughout DeFi Summer
Saw LUNA gaining traction but realized that UST was not collateralized at all
The moment a panic kicks in, it will collapse, just like TITAN
There are 2 coins:
The UST stablecoin
The main LUNA coin
Holders burn LUNA to mint UST and vice versa
Did not short LUNA
He turned a US $1 million bet with Do Kwon into a smart contract and collected the bet
Was surprised by the contagion of the LUNA blow-up
Was expecting funds to hedge
LooksRare
LooksRare is a good example of how projects bootstrap liquidity
Users are given incentives to sell their NFTs on the LooksRare platform
The fees were 2% and they were giving a cashback of 2.5%
This way of incentivizing volume is not sustainable and will be at the expense of holders
dYdX & Solana
dYdX is a good example of projects regarding an unlock schedule
VCs want exit liquidity
What normally happens is that VCs would dump on the market, resulting in poor price performance for the token
This happens in stocks too
Solana also had an unlock in 2020. After the unlock, the price went up very hard
People started to meme bullish unlock and did not care about FDV anymore
“I think it's even going to be worse than the ICO bull in 2017, a lot of crypto investors will get burned even more than now.”
- Algod
Not sure why Solana went up after the unlock
Use cases he is impressed by
Privacy is very important
”We went from the current monetary system, Bitcoin is new money, so yeah, look at my ape, this is worth like 500 ETH or something. So I really hope we can start innovating again and just make the world a better place.”
- Algod
Social Media Account
Where does he get his information from?
Mostly from Twitter
Have a closer group of smart friends to share ideas
Building his Twitter network
Did not get any traction in the first few months
As he started to share good setups and shitposts, his audience grew
Monetizing accounts
3 main ways to do so:
Sell classes
Referral links
Paid tweeting
It’s definitely harder to make investments as a pseudonymous individual
However, there’s more upside to being anonymous
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