In the hype of the incredible cryptocurrency bull run of 2017, I stumbled across a revolutionary token called Waves and their cutting edge decentralized exchange WavesDEX – the first of its kind in history. A long time user of centralized exchanges such as Poloniex and Binance, I was looking to diversify my holdings elsewhere. What better way to diversify than to invest in a Russian based cryptocurrency – it’s like investing in emerging markets, right?
I scoured the Internet to research Waves and was impressed. Everything I read was like nothing I had ever heard of before. Led by brilliant Russian entrepreneur Alexander Ivanov and supported by Vladimir Putin and the Russian government, Waves looked prime. The Waves project completed their ICO in June 2016, raising over $16 million USD in Bitcoin – the largest amount ever at the time and more than Ethereum. Even Burger King got a piece of the action and released its own Whoppercoin powered by the Waves Platform.
I was enamored. It seemed like the perfect investment (I was also tossing money around willy nilly). And most important? Waves provided promise for earning a passive income stream.
A Brief Introduction to Waves
Waves is a blockchain platform that intends to be a decentralized platform for crowd funding and trading by tokenization. On their platform, Waves enables you to create custom tokens, making it simple to launch your own cryptocurrency. Via Waves, you can launch ICOs to fund your projects in a matter of minutes, without the technicality of intensive coding. Think of Waves as the cryptocurrency equivalent of the crowdfunding platform Kickstarter. In the ICO mania where everyone and their mother are launching cryptocurrencies – Waves is well positioned for adoption.
According to bitcoinwiki, the WavesDEX is the first Decentralized Exchange in the history of the world – a true pioneer. In a decentralized cryptocurrency exchange (DEX), no companies operate the DEX, as they are utilizing blockchain technology. Meaning that the DEX doesn’t hold customer’s funds, positions, or information, and only serves as a matching and routing layer for trade orders. The opposite of a decentralized exchange would be the more popular centralized exchange – such as Poloniex or Binance.
Many advocates for cryptocurrency claim that DEX’s are the future for digital assets. Isn’t that the true spirit of Bitcoin anyways – to circumvent central authority? Feel free to read more about the importance of decentralized exchanges here and here.
Leasing on WavesDEX
So, how can you create passive income stream with Waves?
Miners on the Waves network run nodes to secure the network and are rewarded with fees based on the number of Waves they are using to mine. Waves is a Proof of Stake (PoS) mining system, meaning the platform’s coins themselves secure the network, process transactions, and prevent fraud. However, if you’re a non-technical user like me, setting up a node to mine is a barrier. I have no desire to try and set up my own node.
Fortunately, Waves allows regular users to participate in mining by making it easy. I just lease my Waves to the miners from the Waves Lite Client and collect the rewards. It’s a seamless system. The below info graphic does a phenomenal job of explaining how leasing works on the Waves platform:
Think of leasing your Waves as depositing money in a savings account that pays interest – you receive income, but can withdraw your money at anytime and with no penalty. The more units of Waves you lease to a node, the more rewards you receive. The website Wavesplatform.com has a nifty calculator you can play with to calculate your “expected” rewards. Make sense?
Historic Price Action
Before diving deep, it’s worth pointing out the historic price of Waves.
In June 2016 a single Waves token was trading at $0.7 per unit. According to CoinMarketCap, it reached a peak of over $17 per unit in January 2018 – an astounding +%2300 increase. Just like nearly every alt-coin at the time, for a while I felt extremely satisfied with my return on investment. As of today October 31st, 2018 the price has dropped to $1.77 USD.
“I knew I should’ve sold!” – Every Crypto Trader in 2018
While I’m definitely skipping over other awesome features of Waves, this article does a much better job of explaining the Waves platform and I highly recommend giving it a glance.
Now that you are comfortable with Waves and want to become filthy rich let’s see if thats realistic.
My Experience with Waves After One Year
On August 30th, 2017, I downloaded the WavesDEX Lite Client and purchased 410 tokens of Waves for the price of $5.47 per unit.
With the goal of earning passive income through leasing, I was tasked with choosing the best possible mining pool that would maximize my return. WavesPlatform.com is an excellent resource and gives a full list of the top nodes. I decided to lease my precious 410 Waves to wavesnode.net after doing due diligence and reading certain testimonials like:
- “Wavesnode.NET is a top-notch Waves Forging Pool maintained by trustable professionals. It has been around since the very beginning and made itself a name for being a reliable Top 3 generator in the Waves Community.” – Karl Karlsson – Community Manager Wavesplatform & Incent Loyalty
- “One of the hardest working teams I know and the hardest workers are the hardest to find.” – Lootz – Crypto Core Radio
- “Delighted with the quality of service, timely payouts and customer care. One of the hardest working teams I know” – CEO – Core Media
How could I not lease with wavesnode.net after reading that? I’ve remained faithful to them to this very day. They also have awesome Waves merchandise.
Upon confirmation of successfully leasing my waves, I closed my laptop and slept soundly that night – knowing my Waves are working hard.
For the next few weeks, I periodically checked the performance on WavesDEX. Sure enough, I was rewarded random tokens throughout the day.
One of them was CoffeeCoin: “Enabling farm-to-cup blockchain efficiency for the specialty coffee trade”. They are the world’s first blockchain based specialty coffee trading platform. Wow, this is great! Coffee and Blockchain: two of my favorite things together. I wonder if I can buy coffee with this?
Another was iKEY: “Not just another Waves token. iKEY is a token based on the Waves blockchain that allows individuals to truly own, control and manage their digital identity and all waves address in one key by implementing AI”. OK…seems useful.
While some tokens looked legit and potentially added value, other tokens made me chuckle. Like the 416 tokens I was rewarded of the meme coin Covfefe Coin – based on President Trump’s typo in a tweet. Could Covfefe Coin be the new Doge? Many of the tokens in my portfolio are total scam coins – so I won’t even give them the light of day. But the questions remains – are any of these actually worth anything? Let’s see.
Analysis of Returns After One-Year Leasing Waves
For the purpose of returns, I’m briefly calculating in terms of Waves and not USD.
Through August 30th, 2017 – October 31st, 2018, my portfolio consists of 78 different tokens with varying balances. Of the 78 tokens, only 20 (roughly 25%) actually have value and are tradeable on WavesDEX. The tokens I can make a return from are show below in descending order:
|Asset Name||Balance||Price/ Unit in Waves||Total Waves|
If I were to sell all my tokens today, I can potentially earn a total of 4.39 Waves. Considering I began with 410 Waves, I earned exactly 1.07% ((414.39 – 410)/ 410) * 100) for my portfolio.
It turns out my balance of 50 CoffeeCoin won’t be enough to be buy me an espresso after all…
But wait, there’s more.
In addition to these rewards, I also generated 6.57 Waves from leasing to wavesnode.net. This brings my actual total Waves balance to 420.96 Waves.
Using the same logic as before, my actual total return is 2.67% ((420.96 – 410)/ 410) * 100).
Weighing the inherent risk that investing in cryptocurrency poses, perhaps I may have been better off putting my money into a low interest savings account with a bank offering around 1% instead. It would be a much safer investment. However, I will attempt to defend Waves as a superior investment.
My holdings of Waves more than tripled in value earlier this year by reaching a price of over $17 USD. If I had sold at the top, I would have more than tripled my money. Additionally, many of the rewarded tokens I generated from leasing peaked in value around the same time as Waves in January 2018.
For example, the token Mercury was trading at over $1 at one point and has since then dropped to around 10 cents. While I haven’t taken the time to calculate the potential returns of these various tokens at their peaks, I believe it is safe to assume that it would have increased the value of my portfolio further.
This is, of course, a flawed argument – because it’s assuming that I would have sold at the top, which I didn’t. I’m actually now sitting at a loss overall in USD, which is fine. No really, its fine!
Would I still invest in Waves?
YES! I’ve thoroughly enjoyed the journey of exploring the Waves world and the possibilities their technology offers. Even though the returns are lackluster (despite this articles title), I’ve learned a lot about exciting use cases for blockchain technology, various cryptocurrencies, and got first hand experience using a decentralized exchange. For those reasons and many more, I’m ecstatic about my investment and thrilled for what lays ahead in the future.
The Waves team continues to generate constant buzz, which helps spread adoption. This year the Waves platform launched support for smart contracts on the Mainnet and the token also became available for usage on the Ledger platform.
Perhaps most promising is the recent meeting between the Waves team and Joseph Muscat, Malta’s (aka Blockchain Island) prime minister, and representatives of the Maltese government. They explored scenarios for the use of the Waves platform in the state’s government and corporate sectors – including potential use cases in: healthcare, land registry, voting, and tokenized financial instruments. You can read more about it here.
No, I didn’t get filthy rich leasing my Waves and I didn’t generate meaningful passive income. But I am in it for the long haul.
In other words: I’m a bag holder.
On a serious note, I strongly believe Waves is one the most solid and consistent projects out there and I remain optimistic that others will be hearing a lot more about Waves in the future.
Thank you for reading! Please leave a comment and let me know your thoughts!
At the age of 23, Will saw his bank account swell to over $1 million and has since seen it slowly melt away. Unhappy working a typical 9 – 5 job at one of the largest investment banks in New York City, Will carefully planned his exit before gathering the strength and courage to make his escape.
Several themes on his blog are Cryptocurrency & Blockchain Technology, Fitness & Health, Nootropics & Supplements, Traveling and more. Feel free to reach out and let him know what you’re up to. Will loves to hear from others and connect.