The Cosmonaut Quest — Introduction
Welcome to the Cosmonaut Academy, our legend in the Cosmoverse begins here.
Portfolio Diaries from the Cosmos
As introduced in my previous article, I am personally very bullish on Cosmos ecosystem and I have decided to start a new portfolio, completely Cosmos centered with blue chip projects which are born on this amazing framework. In case you want to read a summary of Cosmos Network, find my article here (Cosmos Network Overview).
I am investing in blockchain since long time, but only in 2021 I got the realization of the future impact of this technology and the peaceful revolution it brings. However, there are many projects, with different finalities and tokenomics (economics of the governance token of a chain, it is important to know to keep in mind how inflationary a token could be). So where to invest then? Should you just hold Bitcoin and Ethereum? Should you buy small caps coins hoping to get a x100 and change life? My approach is directed towards those chains and projects which aim to improve the current status quo and bring innovation, while being community centered, and funded by smart and capable visionaries.
The reason I am starting this project is that I hope to ensure, calm or inspire all those who are not 100% sure of what to do in the cryptoverse. I built a Cosmos portfolio from zero for the long term of 5 full years, deadline January 2027. As this is a long term plan, this portfolio is open with a low amount, and will be capped on monthly basis until the end of the 5 years. On top of this, I will write a weekly update, to have historical data for myself and whoever is interested about the progress. It will be an adventure I will share with everyone in details, numbers in hand, in full transparency. In full disclosure this is currently not my main portfolio.
I called it The Cosmonaut Quest.
Now, let talk the set up and the details. This is not financial advice, but I will leave written here my strategy and update the result weekly, so as if anyone is interested and decides to join the challenge and become a Cosmonaut him/herself, will have all the information and methodologies to do it, historical performance data and weekly updates on the portfolio performance.
This will also help me being more detached from this investment and take better choices, we are all conditioned on a personal level when we invest on a project we love. For this, my strategy will have my personal touch from the start.
As I was born on the 5th May, I began the portfolio with just 55 ATOM. The journey begins here.
What do you need to start as a Cosmonaut?
Let´s start by introducing the tools we will need to set up the portfolio. I will not include in the article opinions on whether use hardware wallets or cold wallets. Given the fact this is an ad hoc portfolio I created, I will use a cold wallet and my recommendation is to use Keplr wallet (Keplr). It is a complete Cosmos wallet and can operate on several Cosmos chains making everything easy. Also Keplr Web Browser and Keplr App give you the chance to perform operations on browser and phone (limited actions compared to browser), it is very user friendly. Another good option could be Cosmos Station (link), which gives the similar options. Start by creating your wallet and store safely your seed phrase and passwords offline. I leave you this tutorial for the Keplr wallet set-up taken from YouTube made by “Confident in Crypto”, another Cosmonaut out there making a tremendous job in supporting the community: Complete Guide to Keplr Wallet.
Now that the wallet is ready, how do we add ATOM tokens to it? There are several ways, but the most common is to buy ATOM from a centralized exchange. My personal choice is to use Crypto.com App directly on the phone. In case you still have not an account you can use my referral link https://crypto.com/app/bfemz76sej to sign up for Crypto.com (code:bfemz76sej) and we both get $25 USD. 🤝
Once you have purchased your ATOM on Crypto.com, the next step is to send them your Keplr wallet, you have to click on “Transfer”, then “Withdraw” and then External Wallet. Add your new wallet as per the requirements from Crypto.com App and follow the instructions to finalize.
Add your new wallet as per the requirements from Crypto.com App and follow the instructions to finalize. It usually takes around 2–5 min to complete this process. So don’t stress out. ✌️
Arrived at this point you should have your ATOM tokens available on your Keplr wallet. Finally we arrive at the juice, Cosmos portfolio assets allocation.
Cosmos Portfolio Asset Allocation
The aim of this portfolio, as explained at the beginning is to accumulate, store and farm blue chip Cosmos assets. I plan to make a short introduction for each of the protocols I will keep in this portfolio, but not in this article, check my page to find related information.
Enough introduction, below you can see the asset allocation I see worth building for Cosmos Network:
- 50% ATOM
- 33% JUNO
- 11% OSMO
- 6% SCRT
Note that the average price I bought the 55 ATOM to start was at 25.00$.
The initial investment was therefore 1,375.00$.
In order to trade ATOM tokens for the other above mentioned, the only platform needed is Osmosis (link), a description follows in the next chapter. Under “Trade”, you would be able to exchange tokens that are on the Cosmos Ecosystem. Notable tokens include $ATOM, $OSMO, $SCRT, $UST and many more. Swapping fees usually cost between 0–0.3% of the transaction.
Let’s now introduce the chosen Cosmos Network blue chips assets selected to be part of the portfolio.
ATOM: The King of the Cosmos
ATOM is the native token of Cosmos, the mail token to HODL and accumulate. Blue-chip treasure in the cyptoverse and an investment for the future. I will not lose more time to explain of ATOM here. If you know, you know! 🙋♂️
Find an in depth analysis in my other article (Cosmos Network Overview).
JUNO: Here comes the smart-contract Queen
JUNO is the governance token of Juno Network.
Juno is an entirely community driven, fully interoperable smart contract network built with the Cosmos SDK. The protocol runs as a Hub in the Cosmos ecosystem and has IBC natively integrated. Through the integration of IBC, Juno Network can transfer data packets across a variety of independent networks supporting IBC. Generally speaking the project aims to take away the computation burden of smart contracts from the Cosmos Hub.
Also Juno is a Layer 1 smart contract platform which implements CosmWASM, which is a project enabling WebAssembly virtual machines in the Cosmos SDK. WebAssembly allows software written in many languages to run securely on the blockchain. You can think of it as Cosmos Network’s very own Ethereum blockchain, boosted by the community itself! It’s relevance within the ecosystem is expected to grow exponentially, and this is why I assigned the second biggest share.
OSMO: The Bishop AMM
Osmo is the governance token of Osmosis, the main automated market maker (AMM) built with the Cosmos SDK. Osmosis specializes in the InterchainDeFi movement (Tendermint-based blockchains) in the Cosmos ecosystem. In other words, Osmosis is a DEX (decentralized exchange) specifically built for Cosmos, with plans to expand to more blockchains. At the moment has the majority of all token pairs, biggest TVL (total-value-locked) and great APRs. Must have for a Cosmonaut! Our 3rd spot in the portfolio.
SCRT: The network’s privacy Knight
Last but not least, SCRT is the native token of Secret Network. Secret Network is an open-source protocol that performs computations on encrypted data, bringing privacy to smart contracts and public blockchains. This unique functionality protects users, secures applications, and unlocks hundreds of new use cases for Web 3.
Secret is a Cosmos SDK blockchain and runs on a Tendermint based consensus. Secret was also the first blockchain with privacy-preserving smart contracts. Takes the 4th spot in the portfolio.
How do we use Cosmos tokens?
As mentioned few times, to detain these assets is to use them. All of them. There are several ways to do so. For this strategy, I will adopt a easy way using DeFi, so that everyone could replicate it quite easily, by following the instructions and the example.
I will concentrate on two ways to optimize my holdings: staking and liquidity mining.
1) Staking
Staking is the process of locking up a digital asset (ATOM in the case of the Cosmos Hub) to provide economic security for a public blockchain. There are 3 main reasons to stake your tokens for long term holding (https://cosmos.network/learn/staking/).
- Secure the chain: With ATOM, you have the superpower to contribute to the security and governance of the Cosmos Hub
- Earn rewards: Select one or more validators of the Cosmos Hub and start earning crypto assets.
- Vote for the future: Staking ATOM grants the right to vote on proposals and make decisions on the future of the network.
This process is available to all the tokens in our portfolio and just using your wallet.
Which tool do you need?
Staking can be done directly on Keplr wallet with few clicks. Both from web browser (preferred version) and from phone App. Enter the page and select a validator. Any validator with 5% fee and top 50 is a good choice, but I recommend you check their wabpages to search for professional staking companies. You can do it directly from you the wallet app on your phone:
I leave here a link to YouTube for a quick video tutorial: How to stake on Cosmos sing Keplr browser extension and web wallet.
What is the APY?
Typical APY is 9.7% of staked ATOM (annually). This means that every week we will receive rewards in ATOM, adding up the allocation. Staking tokens is the best way to store your digital assets in the long run.
2) Liquidity Mining (Yield Farming)
Decentralised finance or DeFi, an emerging financial technology that aims to remove intermediaries in financial transactions. It has recently opened up multiple avenues of income for investors. Yield farming is one such investment strategy in DeFi. It involves lending coins or tokens to get rewards in the form of transaction fees or interest. This is somewhat similar to earning interest from a bank account; you are technically lending money to the protocol.
Other than the OSMO token, every other token in you Keplr wallet has to be deposited into the Osmosis Network.
To do so, head over to the “Assets” tab on the left and you will be greeted by all tokens which are on the Osmosis Network.
To deposit the tokens into the Osmosis Network, click on deposit for the tokens you wish. After confirming from you wallet, from there you would be able to see the funds appearing on the Osmosis platform.
There are hundreds of pools which you may participate in. Most of these pools provide decent APYs and would also display their TVL in the pool liquidity.
Personally, when searching for a pool to participate in, I would find one which strikes a balance between decent returns as well as a good amount of TVL. It is important to note that the higher the value of pool liquidity, the more secure that LP would be.
Osmosis also provides a bonding period where you would be able to get APRs based on the duration of bonding period. The longer you decide to bond your LP tokens, the higher returns you will receive. The rewards will be added directly to your pool increasing constantly your allocation automatically balanced on the token pair.
To add liquidity, click on the button at the top and add them accordingly. Take note that you would need to connect your wallet and ensure you have the correct tokens to delegate. Else, go back to the ‘Trade’ tab and exchange the tokens you need!
Although there are several AMM on which these actions can be taken the preferred one I will use for the beginning of the quest will be through Osmosis, as in the same time I will detain OSMO tokens for the future.
The reason is simple. Osmosis has demonstrated to be one of the most innovative projects within the Cosmos ecosystem and on top of LP APRs you will have further rewards from using it:
1. External rewards
On top of normal LP rewards, by bonding for a defined number of epochs you will be eligible to bonus rewards! This is just majestic.
2. Superfluid Staking
It is a new feature launched in February 2022 by Osmosis team. It will allow you to gain rewards from your LP pool as tokens in it could be as well staked while remaining locked in the pool. This is revolutionary for DeFi.
In my strategy, the majority of my $ATOM, $JUNO, $OSMO and $SCRT tokens are being staked on the Keplr wallet. Target is to stake 100% ATOM and 65–70% of the other assets. The remaining would be funneled into my Osmosis LP pools to maximize returns. This way, my exposure to impermanent loss would be lesser and my tokens are very much more secure being staking in the Keplr wallet. Remember that for liquidity mining you still bare the intrinsic risk of using Osmosis platform. Although it has been demonstrated to be extremely secure, please be aware of this risk.
The Cosmonaut Quest: Portfolio Targets
My plan from here is to use the above assets for staking and liquidity mining and therefore increase their number and on top to influx capital on monthly basis in order to built a Cosmos accumulation package.
After careful consideration, I decided for myself to add and redistribute 300$ every months. I will buy 300$ worth of ATOM at the beginning of each month (unless crazy instability is happening, in case might wait few more days to get the best out of it) and reallocate assets in my portfolio in order to keep the % allocation targeted above.
I will then on weekly basis check the status of the current allocation and see which asset is performing better or worst. Rebalancing will be done only once a month. Every 3 months, I will consider the outcome and decide whether asset allocation should be modified or not. The reason is that to unbond tokens from staking and farming takes up to 21–24 days. But we will talk about this in the future.
As introduced at the beginning, The Cosmonaut Quest will have a duration 5 years. If you make some quick math, considering the initial investment (1,375$) and monthly capital influx (300$ x 12 months x 5 years = 18,000$) my total investment forecast for this portfolio will be 19,375.00$.
Here is my strategy for investing in Cosmos Network. I am obviously bullish on the Cosmos ecosystem and I would be holding them for a long period of time.
My approach for The Cosmonaut Quest is rather a conservative one due also to the current macro economical situation and the impact on cryptocurrencies. I believe it will dollar-cost-average perfectly within the whole duration of the portfolio.
Half-yearly, the performance will be reviewed and the strategy readapted to the market situation if necessary. Stay tuned for that!
After checking different sources and forecasts, connecting some dots and studying the general crypto industry landscape and ongoing projects, I determined my targets for each asset in my portfolio.
This is my personal asset price target:
- ATOM = 500$
- JUNO = 300$
- OSMO = 70$
- SCRT = 50$
This target does not mean the portfolio will be closed, but more that the asset allocation will be readapted.
Last but not least, be aware that staking all these assets on chain will grant you many Airdrops in the coming months and years. An Airdrop, in the cryptocurrency business, is a marketing stunt that involves sending coins or tokens to wallet addresses in order to promote awareness of a newly introduced token. Small amounts of the new virtual currency are sent to the wallets of active members of the blockchain community for free or in return for participating to staking and chain security. The more the tokens you have staked, the more it airdrops you will receive. Put it as you prefer but despite the quantities and the prices of airdropped tokens, it is literally free money. Then sell it, stake it is up to you. Do your own research, always, on new projects and their tokenomics.
By applying this strategy, I wish to reach a 100K$ portfolio after 5 years, which corresponds to a X5 from the total investment forecasted as above.
I will not be easy but I also believe it is a rather conservative forecast, let’s judge at the end! Every 6 months a new strategy update will be revealed to ensure risk management of the portfolio.
A message in the bottle I left in space…
To all readers and Cosmonauts wannabe: a quest is an opportunity to learn and evolve, to fight your own traditional convictions and try new paths.
I decided to share with you everything that will happen on this journey and hope you will learn from it as much as I will. I hope to become an active part of the amazing Cosmonauts community and help all the interested but doubtful people to join this new universe.
Sail ho space pirates: a ship in harbor is safe, but that is not what ships are built for.
Please leave in the comment any suggestion, recommendation or request. I want to share this experience with more people as possible to learn and participate to crypto adoption.
Back soon with more updates after the first space trip!
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