How to HODL

After the past few weeks in crypto, you’d be forgiven for thinking that no one has any real idea of what’s going on. The endless calls of capitulation, bear markets, bull markets, buy the dip, and every adage under the sun can leave newcomers feeling exhausted and confused. It’s more important than ever to consume only trusted and knowledgeable sources of information.

This week we’ve seen the collapse of Luna’s UST stablecoin peg, and this decoupling to the US Dollar triggered a sell-off event of their Bitcoin reserves to try and save the peg. This resulted in widespread liquidations and a significant drop in an already weakened Bitcoin which then led to further drops in the value of almost every altcoin.

This isn’t the first time UST lost its peg and goes to show we’re still working with emerging technologies. In such a climate, the only reasonable path to take is one that protects everyone’s resources, not just whales. The only way to accomplish that is to follow a steady process of research-based strategic planning rather than trying to rush to market.

While volatility is part and parcel of the crypto market, recent events can leave many feeling a little shell shocked, but we’re here to remind our community that this only affects traders. For investors, volatility is irrelevant in the long term.

It’s worthwhile to recall Deniz’s words from our last article about the financial underpinnings of Paribus: “In terms of the reserve liquidity, we don’t have a particular set liquidity. We take fees from every loan we generate and those fees go back into a treasury vault. That treasury vault can be used as a backup to make sure the system is always cash flow positive. We’ve been trading live since September 2021 and we’ve raised roughly $2 million. With that, we have about a two-year runway at our current burn rate, so at the moment we’re good. We don’t need any financial support at the moment anymore, so we’re on track obviously on that end.”

In general, both crypto and stock portfolios are down due to the global financial landscape. As countries throughout the world struggle to tackle rising inflation, they’re tightening monetary policy which decreases the value of assets such as stocks and shares.

Over the past month, Tesla shares have dropped 20% in value, Microsoft and Apple are both down 8%, Amazon is down 28%, and Netflix is down 50%. Meanwhile, the US Dollar has strengthened as money moves out of the markets and into US Government bonds. This is known as a risk-off strategy.

During such times money moves out of assets considered to be volatile or risky and consequently, we see money flowing out of cryptocurrency markets too. This is the bigger picture, often referred to as macroeconomics, which overshadows whether we’re in a bear market or mid-cycle of a bull market.

At such times you can draw as many lines and patterns on charts as you like, but ultimately it makes no difference as to what will happen. The next moves in the market will depend entirely upon what governments do about inflation. Once inflation shows signs of settling down, money will begin to flow back into stocks, shares, and crypto.

Until then, what can you do with your portfolio? Should you buy the dip, leverage your holdings, or sell everything and leave? At Paribus, we never give financial advice but always try to explain the overall picture of how financial markets work while trying to find ways to help our community.

That’s why we instigated our native staking program. It offers a way for holders to lock their tokens securely and earn a yield on them without any risk of impermanent loss. There are still two of the staking pools open which offer dynamic APRs of between 20% — 70%. If you join them now, the lock-up period extends beyond the reward period but you can still benefit from the yield you earn.

You can either keep your tokens in the pool for the full lock-up period, and accept that after the rewards stop you won’t receive any additional tokens, or you can choose to remove them at any point and incur a 30% slash rate from the total rewards you’ve accrued.

While it’s better to have joined the staking program at the start, that’s no longer possible, and the future staking aspect of the MVP is still a little while off. Joining our existing programs now will at least give you somewhere to store your PBX tokens while waiting for the markets to recover and still grow your holdings.

Whatever you do, we wanted to remind everyone that the current volatility is something that’s affecting every market worldwide, not just crypto. We at Paribus planned for events like this, which is why we secured funding early on to guarantee our continued development throughout turbulent conditions.

Uncertainty in the short term has no effect on long-term development and while we’re not expecting to moon in the near future, we are confident that we’ll be delivering strong, continued growth over the coming months and years.

For more details of our staking program, you can read this article: https://blog.paribus.io/staking-dont-just-buy-the-dip-f0daeb6ddf6a and join the staking program here: https://stake.paribus.io/