Hello and welcome to The Ether. Today is Saturday, March 12th 2022. This episode of The Ether is brought to you by WeFund. WeFund is a community crowdfunding cross-chain incubator on Terra and it’s the first launchpad that implements a milestone funding release system to protect investors. All money raised for projects is deposited in Anchor Protocol and it’s refundable, and all decisions are based on community voting power. WeFund is community focused and designed to be a user friendly experience for both project creators and investors. Be sure to follow them on Twitter and join the Telegram for more information. Links are in the show notes and check them out online at wefund.app. This episode of The Ether is also brought to you by Glow Yield. Glow Yield is the ecosystem of Terra decentralized apps like Lotto and Creators all powered by DeFi yields. Glow Creators helps artists and influencers give their fans exclusive perks through membership NFTs and more. Glow Lotto is a price link savings account with a weekly chance to win the big jackpot. Tickets are free and perpetual which means there’s zero chance to lose money. Be sure to follow Glow Yield on Twitter and join the Discord community to stay up to date with all the glowing projects and check them out online at glowyield.com. TerraSpaces appreciates the support from all our sponsors. Today on The Ether, LUNAomics Space on TradFi DeFi Interest Rate Arbs. Let’s take a listen.
How I started investing, probably right out of college when… I got married right out of college and I didn’t have a job, I had a degree but I didn’t have a job. And so one of the things that I did was I arbed… Without knowing it, I got a credit card offer in the mail. It was a 0% offer for 12 months. And I had been trading options. It was only for $5,000. It was a $5,000 offer. And so I took the offer, took the $5,000, put it in my bank account as a balance transfer, and then shot it over to TD Ameritrade and I traded that $5,000 in my account, sold premium and made some money off of it. And toward the end of the offer I had… Or, not even in the end of the offer. I remember it was within that year, another credit card company sent me an offer to balance transfer that $5,000. So I wanted to get ahead of the curve, and instead of waiting till the offer expired, I just transferred the balance over. And so now I had $10,000 of 0% offers. So I transferred the balance, and then got the extra $5,000, and then paid back the other loan. But now I had two cards that had $5,000. Then another card offered me a $10,000 balance because they could see that I had two $5,000s, so they offered me a $10,000 balance transfer for 0%, and I took that. So long story short… And those two other credit cards that had $5,000 balance transfers, they up their limit to $10,000 each. So they wanted me to transfer my balances through them. And so now I had $30,000. So then another card offered me a $30,000 balance transfer to move all those others over to them.
Long story short, at the end of the year, I had $75,000 balance transfer offers at 0%. So I had three cards that totaled $75,000 of 0% capital. So I use that capital to kind of start my trading career when I first got out of college and used that money as my initial trading capital when I didn’t have any capital to start with. So that’s the way I got started with traditional finance. For those that are just jumping in, I just gave an example of how I used 0% cards and kind of use credit to build credit, and went from $5,000, 0% to $75,000, 0% offers on multiple cards over the period of a year. So then, I I started working, I had a job, kept my credit score really good, I would always pay the balances off when I needed to. And then bought a townhome off and then used the home equity line of credit to do the same thing. So then I had a home equity line of credit that I could always use to pay off those 0% cards, if I ever got stuck, that was kind of like my buffer account. And then 15 years later or whatever, then I had my traditional finance account with TD Ameritrade, and then I moved that over into crypto in 2017. And so that’s how I got started. Now, I look at what DeFi has to offer and people now have such an easier time making money because trading options with 0% credit card is really, really risky. And you don’t ever want to do that unless you know what you’re doing, or just do it small so that you can pay back your loan if you lose all your money in options.
So that’s kind of my story. Right now I think that the opportunity is amazing, because you can… It’s pretty much risk free. It’s just counterparty risk with Anchor. If Anchor Protocol goes under, then that’s kind of the risk that you have. But because it’s stablecoin yield of 20%, if I were in the same spot that I was 20 years ago when I got out of college, I would definitely do that. Hands down, I would do that. Just scale up 0% credit cards, make sure that I have enough to pay off the monthly loan, and then just dump it into Anchor for 20% yield. So if I did that, I probably would have gotten really aggressive and just scaled more credit cards, because I could have done more, I just stopped at $75,000. But I probably would have just gone up to as much as I could have gone up to, and then dump it all in Anchor Earn and then get $20,000 of extra income per year and then use that to invest and stuff. So I know that goes against a lot of people’s appetite for risk. And I’m not advocating that everyone should do that, or that anyone should do that. There are risks to that. I mean, if Anchor Protocol fell apart, and you had $100,000 loan out, that would be the worst case scenario. So you got to think through what are the worst case scenarios, and do you have the risk appetite for that. So that’s basically the traditional DeFi arb rate. I know a lot of people are doing the LUNA-bLUNA and 3%, and you do that over the course of the year, that’s like a 20%-30% arb, that’s amazing. But the traditional finance to DeFi, you can do that with home equity loans with 3%, you can do that with professional lines of credit 6%, you can do that with 0% credit cards, and then you’re just making free money. It’s a money printer. So as long as you have enough money coming in your W2 to pay off that loan, or you have other businesses on the side that can pay off the monthly loans. It seems like a pretty safe arb. So I’ll just open it up for input and questions if anybody wants to add to that. Any questions or input? Hey Dust, go ahead.
Hey, LUNAomics How you doing man?
Hey, I just wanted to share ’cause I remember you talking about this a couple months ago and instantly caught my interest, and I was able to… Essentially what I ended up doing was I got two cards that I was able to do balance transfers on for 15k a piece. Yeah, so what I did was in one wallet I threw 15k Anchor Earn and then the other staked LUNA with right, so I’m sitting with 30k borrowed for 15 months at 0% APR. Yeah. So super excited about it and happy that you’re able to give some advice, and then kind of open my eyes to this. But I don’t know if maybe times have changed since when you did it. But I find myself… It’s a little bit hard to get banks to balance transfer to get cash into your checking account, I feel like, right. So buying crypto with a credit card in the US is… I don’t know, maybe I’m missing something, but I feel like it’s hard to do if you can even do it at all. So you kind of need to use a debit card and cash. And I’m trying to figure out a way, am I missing something? Is there an easier way to get the banks to give you cash for the balance transfer?
Yeah, I don’t think that the banks want you to use the balance sheets or for crypto. Different ways that you could do that is if you have a… There’s a bunch of ways you could do it. So what they do allow you to do very easily is to do balance transfers with any other type of loan. So say you have a lien on your car at the bank, or you have a home equity line of credit, or a professional line of credit, or any kind of loan that you have at the bank, what I would do is take out that loan first. Because that’s the easiest kind of… If you have that linked up with your bank account, that’s the easiest kind of loan to turn to cash. So once you take out a professional line of credit loan, and there’s a deficit, you take that money in your bank account, wire that over to a legit exchange, like Kraken or something that you can wire money into. With Alice, you probably could do it with Alice, or if there’s any other on-ramps that are starting to come online. But the main thing is that you have a deficit in some loan at the bank, and then from your credit card, you do the balance transfer to pay off that loan. They don’t frown upon that. So as long as you have a deficit somewhere where your balance is transferring into a deficit, it’s pretty easy to do. Bank of America, for me has been one of the easiest banks to work with as far as balance transfers. And yeah, so because I got married right out of college, one of the things that I did was I use my wife’s account as well. So because Bank of America was so good, I opened up a Bank of America account with me and then with my wife, and so every credit card that I found that was good, I just opened it up with myself and my spouse
Right on. So let me ask you, when you do this loan, though, what kind of interest rate are you seeing on that type of loan normally?
So professional line of credit loans right now are probably about 6%, 4%-6%. Home equity lines of credit can be introductory rates from 0%-3%. And then there’s the balance transfer cards that there’s an initial fee of a 3% fee. So you would minus that from the 20% to get the amount of actual cash that you’re printing.
Right on. Alright, cool. Hey, thanks, man. And again, I appreciate you even shedding light on this because it put me in a good position that I am today. So yeah, I appreciate it.
Awesome. Awesome. Good to hear.
Lucky Luciano 14:12
Hey, LUNAomics. So I just closed Friday, on my line of credit. So it’s a 3.25% interest rate, interest only.
Lucky Luciano 14:24
So it’s about, we’ll say, $250,000 dollars, okay.
Perfect, that’s so awesome.
Lucky Luciano 14:30
Where I’m concerned, and this is what I want to ask you where you think you’re going to play this is, obviously, there’s smart contract risk and depeg risk, and everyone always knows that, so I get right, right. So now Alice card comes out, and I could go to Alice card, same probably problem. But are you hearing anything where the… I don’t want to say insurance because I know we all say “FDIC insured” or “SPIC insured”, but where are you at with the risk level of that much money. I’m just curious from your perspective. If you if you went back five years ago or even now and someone gave you $250,000, would you throw it all in Anchor? Or would you go maybe a safer route, arb the rate, and then throw whatever you make into a higher interest rate?
I don’t know. Because right now, everything that I have is house money. So I’m not… I have everything in Anchor. I have everything in Anchor right now. And I’ve kind of grown into that risk so it’s almost like I’m not stressed about it.
Lucky Luciano 15:43
And you’re living off of this, right. You said…
Yeah. Yeah. So I’m trying to think… That’s a good question. I’m trying to think if I was in your position, and I had $250,000 with a three point some odd percent interest, I mean, I might take out an insurance, the different insurances that Anchor provides on it, just as another layer of protection. I don’t do that with any of the money that I have in Anchor right now. But if I was in your position, maybe I would. I probably would put the money in, I don’t know if I do the whole amount, I don’t know. I think I would. I don’t know if…
Lucky Luciano 16:37
Yeah, I want to hear your mindset. Because I mean, I’m sure you have enough in there that you’re…
Even coming right out of college, I mean, I was taking all of that and putting it into options, just trading options, selling premium against it, and then taking the premium every month that I’m collecting, and then would use that to pay off the minimum balance. And as I’m paying off the minimum balance, and my account is growing, I’m kind of building equity in my trading account. So with Alice, if I were to go back and look at what I did, and kind of superimpose it on what is possible now, probably I would, I would put it in Anchor and then take the yields that are coming out of it, and then use that maybe to pay down the loan to lower my risk every day. So that that $250,000 balance that’s in the bank is slowly getting smaller. But yeah, and I think that the 20% is actually APY, I don’t think it’s APR. So I think that at the end of the year if you hold everything in there, it’s a 20% at the end of the year, it’s not a compounding 20% APR. So I don’t know, maybe it would be good to just keep it in there to compound to that 20%, I don’t know, there’s so many different options.
Lucky Luciano 18:13
No, I want to hear you talk about the risk of it. I mean, I’m always curious for people that have a lot of money where your mindset is with the risk of it on Anchor. I mean there’s 15 billion dollars that’s in it, so I get it like there’s a lot of money on Anchor.
Yeah, yeah. I don’t know if I would insure it, because then you’re taking away from that… Yeah, so I don’t know.
Lucky Luciano 18:37
Cool. All right.
But that’s awesome, man, 250 grands, 20% of that, what is that? Fifty thousand dollars of money?
Lucky Luciano 18:44
Yeah, essentially free money.
It’s a full time income. It’s crazy.
Lucky Luciano 18:48
Cool. All right. Thanks, man.
All right. Yeah.
Hey, LUNAomics. Thanks, again for hosting this Space. I guess also, this is a good segue because I also am in the process of getting a home equity line of credit. It’s also about $250,000, and I was thinking of putting it into Anchor but my fear is if I completely max out that line, won’t that also tank my credit score?
No. If you’re paying it off… Well, it won’t tank it. They like to see… I think what the number is is they like to see 50% or less. So yeah, maybe it would decrease your credit score a little but it wouldn’t decrease it a lot, maybe like 10 points or something, I think. It wouldn’t tank it. I maxed out everything. [chuckle] I maxed out everything all the time and my credit score was high six hundreds and then whenever I would pay it off it would jump into the seven hundreds or something.
Okay, that’s very reassuring. I had an issue with a credit card where I’ve just made a big purchase and then my credit score dropped like 140 points. Yeah. And then that scared me because I was in the process of getting this HELOC at the time. But then after a month, the score completely recovered. So my worry is that if I completely maxed out the 250k, then that would be the best yield, but then my credit score could potentially suffer, but it’s good to hear from your experience that it didn’t dip that much.
Yeah. And I think once you secure that HELOC, then you don’t care about your credit score as much. I mean, that’s kind of what you have your credit score for is to get access to that kind of capital. So once you have that capital, then you can kind of relax on if your credit score is going to dip or whatever, because you have that $250,000 that you can play around with. So you just want to make sure that by the time that HELOC is done that your credit score is back up to where you want it to be.
Yeah, it’s fully recovered now, but it did take a month for that to recover.
Yeah, which isn’t that bad. It’s not that bad of a time frame for your credit score to get back up to normal.
Yeah, and I guess you already answered my previous questions, too. I had also similarly wanted to hear your thoughts about the risks with just dumping all of this into Anchor and your thought process behind that. So yeah, thanks again, and hope you have a great rest of your weekend.
Thanks a lot. You too. Hey, how’s it going?
reymar imaysay 21:33
How are you guys? I just have two questions. Firstly, I just started with Anchor Protocol and Terra Station. And I’m just wondering if you guys take out money from Anchor Protocol, do you guys have to do that or you have to go to regular exchanges.
You can take it straight out of Anchor Protocol.
reymar imaysay 21:56
Okay. One more question regarding Terra LUNA. Do you guys know if you’ve heard anything regarding LUNA can be listed on a retirement platform like iTrustCapital?
I have not. I’m not sure if anybody can answer that question. I’m not sure. You’re asking if LUNA is being listed on what exchange?
reymar imaysay 22:21
Retirement platform like iTrustCapital.
Oh, yeah, yeah, you can. My sister and one of my good friends have actually transferred their… One has a Roth IRA, another one has a regular IRA, and they have turned it into a self directed IRA. I forgot the company. There’s a bunch of them out there.
reymar imaysay 22:45
I know because I have iTrustCapital. And iTrustCapital is well known right now with retirement platform, but I’m waiting for Terra to come in. They have Cosmos but I’m waiting for Terra to come in because I’m really excited the way Terra and UST and everything. But that’s what I’m asking, if you guys can answer probably, do you know anything or you can hear the Terra eventually…
Yeah, they invest in Terra, the way that they do it is… I don’t think it’s through iTrust. I know it’s not through iTrust, it’s through a different company. But you can actually go from that company straight into Kraken. And then you can do whatever you want from… You can send it anywhere. So you can send it into the… You can go from Kraken, buy Bitcoin, convert it to LUNA, send it to your Terra wallet, and all of that money is tax free. You just got to… I believe you got to bring it back through Kraken. I’m not positive but yeah, they’re heavy into LUNA and they’re trading it through a IRA and a Roth IRA. But I’m not sure what the company is. I could get it for you. If you want to DM me, I can get the…
reymar imaysay 23:21
Are you talking about the retirement money going to Kraken and they’re the one…
Yes, it doesn’t go straight to Kraken. It goes through a subsidiary that channels the money. You get it and then you can move it from there to Kraken.
reymar imaysay 24:27
Yeah, I got quite a bit… Over the money in iTrustCapital that’s kind of waiting, or asking eventually LUNA going to iTrustCapital. I’ve been waiting for quite a while. [chuckle] And LUNA is kind of really pumping hard so that’s why I kind of… Just anything or are they going to iTrustCapital.
Yeah, yeah. DM me and I can send you the name of the entity that they’re going through.
OnΞ ᚱo©k 24:57
I can speak… Can you hear me? I can speak on this because I have this as well.
OnΞ ᚱo©k 25:05
Yeah. So the one I… I have it with a couple of different companies. So basically, in a self directed situation, what happens is the company you sign up with creates an LLC for you. And then that LLC has a bank account. And then basically, you apply to different… I’ve gone through Kraken, Gemini, Paxos, pretty much any exchange you can sign up as an institution without account. And you’ll have to upload all the docs and everything for that LLC and go through KYC. But once you have that set up and you get your money transferred into the bank account… The one I have experience with, or that I like better, I have two of them, but Rocket Dollar, mainly because when you sign up with them… They have a banking partner so it saves you the hassle of having to set up a bank account separately, and that takes extra time. So I think you could probably get onboarded with a… Couple of their onboarding processes. You just get interviewed and get the name of your LLC. And then a couple weeks later, you’re set up, you have a bank account, and then you can transfer money, like IRA to IRA account, or into that account. And then in the meantime, you can start setting up your exchange account or accounts. And then once your money hits the bank account, you can wire the money to the exchange. Once it’s in the exchange, then you can do whatever you want with it right.
OnΞ ᚱo©k 27:02
So a lot of my money right now is in the LUNA ecosystem in Terra, you can sign up with Celsius to be Celsius with an institutional account as well. And then you can just do anything pretty much you want to. And then at the end of the tax year, you just have to say what’s your balances to the company, and that they update records and whatever, send it to the IRS or whatever. But yeah, I would definitely… I guess, I would say do that instead of something like iTrust, because with iTrust, you’re just gonna get one… They’re gonna rake you over on the trading fees, it’s gonna be 1%, or even 0.5%. I guess it’s fine if you’re just gonna buy and hold forever. But if you want to get involved with any type of DeFi stuff, more than likely those platforms, maybe they’ll offer it later on, but it’s gonna take a lot of time. So if you want the most possible flexibility, then you want to get a self-directed IRA, because that gives you the most options to get into newer projects, or whatever.
That’s awesome. What was the name of that self-directed again?
OnΞ ᚱo©k 28:26
The one that I recommend is Rocket Dollar.
Rocket dollar. Yeah that sounds very similar to what my sister and my friend are using, not the name but the function of it, where you set up that LLC and you could do everything. That sounds really cool. And to be able to do it with a Roth, so that when you’re getting these 10x returns, it’s completely tax free. That’s incredible.
OnΞ ᚱo©k 29:00
Yeah, so yeah. For me that’s where I do… Anytime I’m selling… In personal accounts, I try not to sell much I only want to hold things that I feel like are on sale and I can just hold because I don’t want to have a bunch of taxes to hassle with.
Yeah, so Rocket Dollar, what’s the fee to set up the LLC and set everything up?
OnΞ ᚱo©k 29:29
There’s a couple of different… I don’t know what it is now. There was a couple of different options when I signed up. The one I signed up with was a gold or the higher tier one and that was I think $600 to set it up and then it’s $30 a month, basically.
Wow, that’s really good.
OnΞ ᚱo©k 29:50
That’s it. There’s no percentage trading fee or whatever. And they also had one that was cheaper, $300 to setup and $15 a month, but that one you have to go through their bank account. They have a banking partner but they don’t just do it for you. It’s more hands on.
And then how long was the process?
OnΞ ᚱo©k 30:17
Oh, yeah, that’s what I was gonna say. With the second one, it’s only email support. Whereas the other one, you can talk to somebody whenever you need to. Not that would realistically need to happen. Because once you’re set up, it’s pretty much… You’re never going to need to talk to them. And then yeah, so what I like about it, you just go on their site, it takes maybe a 5-10 minute interview, I mean, you’re walking through putting in what you want your LLC to be named, all your KYC and everything. And then basically… I think it was like two weeks… And this might have been when it was more popular to sign up for these things. I don’t know, how much demand there is now. But I want to say it was 2 to a max 3 weeks where all the paperwork was… The LLC, it was a Colorado LLC, I mean, whoever they work with. And then they had the bank account all set up with their banking partner. And then in the meantime, I think it was probably within a week they had already sent me the legal documents and everything that I could upload to an exchange. So once you get those back, you want to just go sign up with one or more exchanges, start that process. That process, it can take a while, like Gemini can sometimes take a while, but I think it just depends on how many people are wanting to apply when you do yours.
Awesome. Thank you so much for that.
Hey, LUNAomics. Thanks for this space. This is awesome.
Hey, Garret, how’s it going?
Good. A thought on just what the previous speaker was saying that I kind of wanna go back to the 0% credit cards. So I do… Hutch just had a Space on this as well talking about the Roth IRA. And that’s exactly what I’ve done. So I’ve used the company, Directed IRA, which has been great, I can’t remember their exact fees but I have moved my Roth over into really the Terra ecosystem fully at this point. And then BlockFi was the quickest one for me to secure the business LLC approved account through a self-directed Roth IRA. So it’s awesome. No taxes for me, there are a few things from a UBIT standpoint that you can’t do. But really, you can play in the majority of the ecosystem with no problem.
Yeah, I just want to piggyback on to that. Directed IRA, I looked into that one as well. I think it has pretty good fees. And also, those guys have a… The one that pops to the top of my head is Mark Kohler. He’s one of the guys that does Directed IRA, Mark J. Kohler, he’s on YouTube and he does… He talks a lot about crypto, and self directed IRAs and stuff. He’s like a tax lawyer or whatever. But him and his partner run Directed IRA.
Yeah, Mat Sorensen. Yeah.
It’s a good resource. Sorensen, yeah, Mat Sorensen. But their YouTube channel, they have a podcast too, but they have… It’s a good resource that if you’re just starting to learn about this stuff, I’ll definitely look them up on YouTube.
LUNAomics, I wanted to add one thing to the credit cards. I think that’s an awesome strategy and one that I use, I have found that using a business line as opposed to a personal line, then you can max the card out and it never impacts your credit. Because on your personal lines, if you do approach that 30% utilization, it does start to negatively impact your credit if you’re intending to use it for whatever reason in your personal life. And there are organizations out there if you’ve never secured a business 0% APR credit card, that they can definitely help you. But I have found it’s not that difficult as long as you have an LLC set up and you’re doing some form of business, you can get 0% APR credit cards on a business line, and then they don’t even report to your credit. Well, most of them don’t, once secured.
Gil Meshulam 34:27
Garret, I just wanna jump on on that as well. LUNAomics I know you posted about that earlier, so how are you guys going about and actually liquidating the credit card to actually then, for instance, taking that 50,000 whatever line of credit you have, and then transferring it into the Anchor Earn and then at the end of day paying it off?
If they don’t have balance transfer, I’ve used the site Plastiq, or Plastiq. There’s fees on there as well, but there’s ways to pull that balance off.
Gil Meshulam 34:56
You said it’s called Plastiq.
Yeah, Plastiq. I think it’s with a T-I-Q at the end.
Gil Meshulam 35:02
Gil Meshulam 35:04
So the credit card has to have a balance transfer?
Not if you’re using Plastiq. Plastiq is basically a site that will let you pay for things with a credit card that you otherwise can’t pay. And so really, you can pull that off and pull cash out of it that way, of course with a fee, but that’s an option especially if you’re going to be putting it to even just Anchor on a 20% and then gather that interest and play with house money.
Gil Meshulam 35:29
Yeah, no, that’s what I was thinking. But then what about paying it off at the end of the day, too? Because something like… I know we probably have, hopefully Alice comes through and we can probably just move the money into there. Would we just use a service like that to pay off the credit card in full? Or are you… I guess I’m just trying to understand, because I know there’s also concerns with the smart contracts risk, like what happens if you’re moving that 50 grand, and all of a sudden gets lost in that space.
Yeah, that’d be a big problem. But for me what I’ve done, I’ve just literally gone… ‘Cause you still have to on-ramp there, right. So whatever central exchange you’re using on-ramping it into the Terra ecosystem, you just do that in reverse to pay it off. And of course on a 0% APR, like LUNAomics said, you’re still gonna have monthly minimums on an ongoing basis once you pull the cash out of that card that you’ve got to be able to cover or it will report even if it’s a business line to your personal credit.
Gil Meshulam 36:21
I think another way to do it is to have multiple loans that are not totally used, like not totally accessed, where you can rotate things. So I would have my home equity line of credit, professional line of credit, and then my credit cards. Those are all available credit. And I would never max out all the credit, I would have 1/3 available and then 1/3 I would use, or 1/2 available and 1/2 of that I would use, and then I would rotate it in and out whenever the 0% cards would come due, then I would use the home equity line to pay off those cards. So then now the balance is on my home equity line of credit, but I don’t have the stress of paying off those cards. And then when those cards are paid off, then they always come back and say, “Hey, we want to offer you another 0% for the next 12 months.” And then I rotate them back out. So I would always have some sort of account where that money is available, where I could kind of cycle them through. So that’s always something… If you want to have some of your money parked in Anchor that you don’t want to pull out, then just use half of your credit and then rotate it back and forth.
Gil Meshulam 37:49
Smart. Cool. Thanks.
Hey, guys, thanks for holding this Space. It’s super interesting. I’ve learned so much from you, LUNA and from Lucky. So I just want to say thanks from the outset. I wanted to touch on something that I’m doing to see what you guys think about it, because I think Mars has opened up a whole new set of possibilities for people who have a bit of LUNA but want to get more exposure and have managed to on-ramp cash the way you suggest, into the LUNA environment. And what I’ve seen ever since Stader and now Prism is that there’s more of focus on community farming to disseminate a token. And with that, now that you can actually borrow LUNA against UST you can actually put the borrowed LUNA to work. Let’s say on Stader it would have been to farm the SD token, or on Prism is to farm PRISM while still retaining the LUNA. So if LUNA starts rocketing, you can just pay it back to Mars because it wasn’t yours on the first place, and you’re only paying 1% on the LUNA. So I’m seeing quite a lot of opportunities to use the cash that you’ve got to gain exposure to the crypto space without actually taking real risk on the price of LUNA, buying now and seeing it go down 30% and feeling terrible. So I was just wondering if it’s something you guys have been looking at, because for me, I came to LUNA relatively late. And so buying at $100 to $80 feels a bit tricky, even though long term I’m pretty sure we know where it’s going. But I just wanted to see if anybody’s looking at these sort of opportunities to grow exposure to the primitives and to LUNA itself. Could it also be things like staking LUNA-bLUNA on Astroport, and getting ASTRO rewards or something like that, because at the end of the day, you can just take out your LP and hand the LUNA back to Mars. And all you’re paying is a cost of funding.
I think you got to be really careful anytime you use borrowed funds to make sure that you always have access to those funds to pay back alone. I’m not super… I don’t think I would ever… And I don’t understand all the different dynamics behind Mars yet. I mean, I’ve played around with it, I have some that I’ve just… I’m in the ANC-UST farming, and doing that, but they ran out of UST to borrow so I’m just waiting for the next round of UST to become available or something. I don’t think I would ever… And I correct me if I’m wrong, I would never use the capability of borrowing LUNA, if there was any possibility that I would have to pay it back at a higher price. Is that a possibility to borrow LUNA off of your UST? Like you deposit your UST and then you borrow LUNA?
Yeah, I would never, never do that. I would never
But you’re not selling the LUNA. That’s the thing, right? So in the in the situations that I’m suggesting you’re never actually getting rid of the LUNA and it’s fairly freely accessible. So if it does start going up, you just pay it back straight away.
I know. But you never know… LUNA goes up 10 points at the day.
Yeah, and I just wouldn’t want to get myself in the situation. Normally, you want to look at something like the general trend of something. So I’m more long term, even though it doesn’t seem like it, [chuckle] I have a little bit more long term conservative approach. So long term, I know from past history and just the tokenomics of LUNA, that it’s going to be higher tomorrow, or higher next year than it is today. So I want to position myself to be able to handle all of the crazy ups and downs, and then just be there. I also know that the dollar is going to be worth less a year from now than it is today. And so those are the kind of plays that I jumped into. And so I would never short LUNA ever, even if it was a short term thing, even if it made a huge top or something. Because you never know when FOMO is gonna kick in, and it’s just gonna ramp up another $100. And if you’re doing that with borrowed money, that’s the nightmare. It’s a nightmare.
Yeah, no, I’ve also deposited actual LUNA into Mars, because that dampens up the upside volatility on my LTV. I’ve got a sort of 2/3 to 1/3 UST to LUNA mix. And it’s just a way of getting more exposure to ecosystem without buying it. Because I’m quite concerned about the general market, not LUNA, particularly at all. So that’s kind of where I’m at. I suppose you could say I’m a bit short, but okay. No, no, makes sense. Alright. The risk is fully appreciated, you have to keep your LTV sensible, and have LUNA ready to pay back for sure.
Yeah. And that’s just with borrowed money. I mean, yeah, borrowed money is different than if you’re just shorting something cash.
No. Alright, thanks.
Yeah, no problem.
Gustavo Acosta 42:58
Hey, LUNAomics. How’s it going? Gustavo here again, I had a quick question. I’ve tried to… I looked up, Alice. And then I found the Twitter, clicked on the link. And I was one of those people that was going to get a code. But I haven’t got one yet, it can take a while, I know that. But it said there just put your email address, so I sent that over to… I forgot what the guy’s name was… BigT? And then he said, “No, it’s a scam. Only people invited get to use it.” So I’m a little confused if it is… He says scam as in, no, I think he’s meaning you can’t do it that way, not like Alice is a scam. So I was wondering if you could just maybe reiterate that part a little bit.
I don’t understand your question. So you got an Alice invite or something and it didn’t work. Is that what you’re saying?
Gustavo Acosta 44:02
Well, no, no. So one of you guys said… I think BigT was gonna help me get an invite. But I remember the first time me and you spoke, it was I think last week or something. Yeah, can you hear me?
I can hear you.
Gustavo Acosta 44:19
Okay. Yeah. And so pretty much that was the first time I heard about Alice. So I went, found them out… I mean, found their Twitter, clicked on the link, put my email in there. So I was just a little concerned when I see saw BigT say, “It’s a scam you have to get entered in.” So I’m just a little concerned that if my email when I put it in there if it’s gone into like phishing websites or something.
No, no, no, I don’t think so. If you went to the real Alice website and you put your email in there, then you’re just going to get notified when they come out with their actual card. Right now it’s just in beta. So I put my email in there. I put multiple emails in there. Yeah, don’t worry about that. As long as it’s the legit site.
Gustavo Acosta 45:14
Okay, it is. Okay. No worries. That was just a quick question there. And then were you able to have a code or should I just be patient on that?
I don’t have any extra codes right now. I’m all out.
Gustavo Acosta 45:28
Okay. No worries. I think yeah, well, I’ll just sign off and just keep listening… Or mic off, so I can keep learning some tricks there. I guess one thing that I heard earlier that I would love if you could clear up my confusion was about Trade View, is there another… What is it called? iTrustCapital. It’s like the IRA type thing for it. You said there’s a better version or because I know…
One of the listeners brought up Rocket Dollar. He said Rocket Dollar, they set up the LLC for you, tou go through the LLC with a bank, and then you can do self-directed into whatever exchange that you want. And then you just got to report every year the balance, and then they just record it for you and then if it’s an IRA, then you got to pay taxes when you withdraw it. If it’s a Roth IRA, you don’t need to pay any taxes when you withdraw.
Gustavo Acosta 46:34
On the Rocket Dollar.
Rocket dollar. Yeah, I believe that was the name. I haven’t tried it. But that’s what he said. And it sounds really similar to what my sister and my friend are doing.
Gustavo Acosta 46:44
Awesome. Thank you. I appreciate that.
Yeah, no problem. Let’s do one more question and then I gotta go.
Hey, LUNAomics. Good afternoon. Since you come from an options trading world, I have a question for you, ser. So I’ve been trading options for a while. And specifically, I’m a big follower of Tom Sosnoff and his tastytrade mechanics. [chuckle] So I’ve been doing reasonably well, and…
Yeah, yeah. So it’s been a fun ride. I’ve been doing this for five plus years, and been making decent returns. And he kind of preaches about 2.5% per month, or 30% annually would be a good target to shoot for. And I’m right around that target for five plus years. So it’s been going good. Just before I went down this rabbit hole of DeFi, and Terra specifically, and then now I’m thinking that 30% is not so hard here, because 20% is my Anchor rate for doing nothing, right. And then I add some Mirror delta neutral strategies, and then it’s not hard to hit 30% at all. So the question to my mind is, am I on the right track? So my goal with this part of my portfolio is to produce cashflow, not to see LUNA go to the moon, but just create cashflow the way I was doing with delta neutral trading on tastytrade. Am I on the right track, or am I missing something here?
I mean, welcome. [chuckle] I was exactly where you were. So I was a tastytrader generating between 30%-100% returns per year. But it’s a lot of work and it’s a lot of stress. I did options on the futures market, mostly oil, gold, the ES, you know, the main ones, and then selling strangles, naked strangles. So it was pretty nerve racking. So then once I started getting into DeFi, I found the same thing that you’re finding now that it’s way less stress and way easier to make that 30% yield in DeFi. And so it seemed a little bit unrealistic in the beginning, and it took probably, I don’t know, a couple months of trying small amounts and getting comfortable with it. And then I think it was probably three months I moved my entire portfolio from TD Ameritrade and tastyworks over into DeFi. So I have nothing in the tastyworks platform or in TD Ameritrade.
And that’s the part… So thank you. So that’s a part I started on about two weeks ago, three weeks ago, and I moved a small amount of what I had in tastytrade. And the profits I’d made there, I moved this to a separate wallet, just to keep it separate so I can monitor its performance independent of the other LUNA stuff, and I’m seeing if I analyze this, it is easy 30%. So my thought would be to slowly increase the allocation here and then at some point, make tastytrade 0%.
Yeah, one other thing you’re talking about cashflow. This whole ecosystem is like a cashflow printing machine. It’s insane. So the basic strategy that I use is, when you understand the tokenomics of this whole ecosystem, it’s almost created to generate massive amounts of cashflow on an increasing amount, month over month, year over year. Maybe not month over month, because sometimes there’s down months. But for the most part. There was two down months in 2021. They were big down months, but two down months in 2021. So for the most part, the demand for UST fuels the burning of the LUNA token. And so when the LUNA token burns, there’s less supply. And there’s all of this development on the Terra ecosystem that uses LUNA. So the supply of LUNA is being burnt on both ends. It’s being burnt, but then it’s also being bought up by protocols, staked, and so there’s just a massive amount of demand for it as well. So you have a huge demand, a lowering supply of LUNA, it has been designed so that this token goes up in value. So the way that I’ve structured everything is I just buy LUNA and then I borrow off of it to create cashflow. So you can check that out on the pinned tweets, I have everything outlined there. And the Discord is open to ask questions, and you can jump on Cephii’s Spaces, and my Spaces, and whoever’s to just ask questions. Everyone’s super, super helpful. But if you… And this is the thing too, if you’re a tasty trader and you understand finance, you’re gonna kill it. This is 100% easier than options. It’s so easy. It’s crazy. It’s like people just giving you money. It’s insane. [chuckle] I’ve never experienced anything like it in my life.
That’s what I see. And then I thought maybe I’m so stupid. I’m missing something very obvious. So let me ask the teacher here. [chuckle]
No, it is that easy. It’s an opportunity that I think we’ll have for, I don’t know, a couple years. It’s definitely the macro trend. Decentralization is a macro trend. And finance is one of the last things to be decentralized. So, you know, it’s in the right direction. There’s gonna be bumps along the way, but it really… That’s like the safety net for me. When I think of what are the risks, that macro trend of decentralization is kind of the safety net for me. So, when I move everything into it and things drop, I just lean on the tokenomics, understanding the tokenomics of LUNA and the trend of decentralized finance. And it takes away a lot of the nervousness and the fear, because we’re on the right… You are very, very early in something that’s not going away. It’s like being one of the first sellers on Amazon when retail was being decentralized, you’re like one of the first people jumping into these decentralized protocols in the very beginning.
I sell on Amazon as well. So I totally get what you’re saying. [chuckle]
Yeah. And welcome, welcome. I love tastytrade. I love tastytraders. I’m stoked that you’re jumping into the ecosystem. We’ll probably have a lot of stuff to teach in the months and years to come.
Perfect. Thank you, sir.
Yep. Alright guys, thanks for hanging out, and I’ll see you in the next Space.
Thanks for checking out another episode of The Ether. That was a LUNAomics Space on TradFi DeFi Interest Rate Arbs. Recorded on Saturday, March 12th 2022. This episode of The Ether was brought to you by Talis. Talis Protocol is the NFT platform for independent artists on Terra. Talis helps to provide artists with the tools and resources needed to transition from traditional arts into the NFT world. With their V1 launch coming soon, Talis will be the place to see real world art reflected on Terra. Be sure to join their Telegram and follow Talis on Twitter for updates on their roadmap, validator, and other Talis news. Find your next favorite artist on talis.art. This episode of The Ether was also brought to you by Orbital Command, a community validator on Terra dedicated to educating, expanding, and promoting the LUNAtic community. Have you heard about the new Terra Invest Strategy Discord server Orbital Command spun up? If you’re looking for a chill place to chat about different LUNA stacking strategies, or looking for some alpha, or if you’re trying to find the best UST farms, or even if you just have a quick question you need answered, be sure to stop by TIS and say hi to the Orbital Command gang. Hell, I’m even in there sometimes when I’m not editing hours of Cephii spaces. You can find me in that server chatting about NFTs and answering basic Terra LUNA questions. The link to the server is in the show notes and for more information check out orbitalcommand.io. This episode of The Ether was also brought to you by Luart. Luart is the first gamified NFT platform built on the Terra network. Luart provides a seamless minting and trading experience all while earning you rewards just for being a user. Be sure to follow them on Twitter and join the community in the Discord server for the most up to date news and announcements regarding all the hot new NFT launches, platform upgrades, and new projects hitting the secondary marketplace. Are you ready to #PutYourHelmetOn and join the movement? Find out more at luart.io. TerraSpaces appreciates the support from all our sponsors. For terraspaces.org, I’m Finn. Thanks for listening.