Why Deflationary Cryptocurrency Is The Future
Bitcoin, Doge, and FUD
For the past 10 years projects like Bitcoin and Doge have been at the forefront of the crypto world’s collective consciousness. This isn’t a bad thing by any stretch. The latter has incredible history and institutional growth, and the former is all about community, memes, and Elon pumps.
They are respectable projects in their own rights, however, they are anything but future proofed. Both are incredibly susceptible to market manipulation via big-bagged whales selling (or emotional billionaires tweeting) their holdings all at once out of fear, greed, or both. While Bitcoin does have a max limit to how many can ultimately enter circulation, Dogecoin does not and will grow by 14,000 every single day in perpetuity.
This creates many situations where under normal circumstances a coin like Bitcoin would pump, only for a whale to then dump a massive bag and cause Bitcoin to dive. The same can, and likely will be said of Doge coin when its biggest whales (of which who hold a large minority of Doge’s circulation) decide to take some profits.
And in Dogecoin’s case, I wouldn’t be shocked to see Dogecoin’s price to plateau as retail investor struggle to buy more than there are made daily.
How can this be circumvented?
Enter Deflationary Meme Tokens
The answer is deflationary, anti-whale, anti-dump tokenomics. Sure, there are going to be dips regardless since there’s no way to have a token that doesn’t, but these parameters help create stability — even early on.
These concepts are made even better with the inclusion of utility in the form of charity donations, NFT support, or celebrity backing. The magic that forms the backbone of all of the tokens that use these tokenomics are frictionless yield farming.
This particular kind of farming happens without you having to do anything beyond holding your bag on a wallet like Metamask. Here’s how this kind of auto-staking works: Every purchase or selling of the project that does this is taxed at a predetermined percentage by the project’s creators.
That percentage is usually between 1 and 5%, with most or all of that tax being redistributed to everyone currently holding said project.
It’s All About The Tokenomics
I have also seen some alternate takes on this deflationary approach where some coins will tax up to 12% of a transaction for redistribution to holders, burning some of the supply, and even having a wallet to pull from for marketing or donations to charity's.
The more money you have in a project like this, the more you will get back through the redistributing of the taxes. Even better is that if you’re making $3 dollars a day from the redistribution process and the coin goes up 5x, you’ll be seeing $15 a day (more or less depending on daily volume). If you hold enough of the same project long enough you could double (or more) the size of your bag.
This is even more true if you can find a good project with good fundamentals. Especially if you buy in within a week of its initial launch. This shouldn’t be too difficult because ever since Safemoon’s growth and success there have been a lot of copycats coming out of the woodwork, and a lot of these coins have similar tokenomics to boot.
You'll see these coins shill on social media like crazy, promise the moon and an easy 100x. They’ll claim the liquidity is locked away for years, and have doxxed developers for the sake of transparency. With some even spending great sums on marketing, NFT marketplaces, and charity donations.
Always Do Your Own Proper Research, Never Take Another Person’s Word For It.
When confronted with these seemingly incredible opportunities it is very important to do your own research and dig deep to see just how much these projects sacrifice safety for profit potential. That said, I will make a separate article discussing the ways I find viable and ultimately profitable micro-cap alt coins of this manner.
For now, just keep in mind a lot of these kinds of frictionless yield farming coins can be found on the Binance Smart Chain. BSC’s incredibly cheap (roughly 20–30 cents per transaction) gas fees are what make the Binance smart chain a perfect breeding ground for new projects.
Profitable Profits
So far I have invested around 2 grand into these micro-cap projects and have more than tripled my money — until Elon tweeted about dumping Bitcoin and tanked everything (but that’s a story for yet another article…) Even so, I’m still a lot more up than I was at the start thanks to these projects and what I learned along the way.
If even one of these investments of mine were to hit a 5 or 10 billion marketcap, I’d be sitting on a good chunk of life-changing money. This is especially true when you consider just how much lower the current supply of these coins will be if they can last a year or longer, thus increasing their potential price (and profit for you) even further.
The Future Is Bullish
I believe going forward we will see new crypto with deflationary tokenomics like the ones I’ve bought into, but also with mass utility on other blockchains like Cardano (ADA).
10 years from now I would be shocked if half of all crypto currencies WEREN’T deflationary in one way or another. All in all though, that’s just me being hopeful and projecting what I like onto the market. Time will certainly tell and I’m bullish for crypto either way — deflationary or not.
Thank you for reading! What are some of your favorite micro-cap gems to hodl?
