Weirdo's Log

Cryptos - Events

One of the most important events in crypto history happened and went as planned. The Ethereum Merge is done.

Eight years after Vitalik Buterin, the most known co-founder of Ethereum, shared his vision that Ethereum would become PoS, the transition is now completed.

Ethereum energy consumption will be reduced by ~99.95%. This is excellent news and hopefully also the start of positive events in the future. 👏

The FOMC meeting is coming up this week on Wednesday. This usually means volatility in the crypto world, so keep the eyes on your bags. 💰

Bangkok daily life

Bangkok is treating us well; such a lively and vibrant city. We spent a great weekend exploring the neighborhoods, tasted some great food, and wrapped the week up with a great Thai massage on Sunday. We hope to make it a tradition now!

We successfully extended our Visa in Thailand. It was quite a trip, and it took several hours, but we did it. We came here under the Visa Exemption program, which allows listed countries to visit Thailand for a month. If you wish to stay longer, you can extend your Visa Exemption for 30-days (it costs 1900 baht to do so), do a Visa run and leave Thailand for a couple of days and return, or apply for a Tourist Visa.

Thailand CCSA has announced that after October 1st until March 31st, the Visa Exemption (applies to these 64 countries) will be extended from 30 to 45 days. This is the initiative to bring more tourists to the country. We salute this decision.

So if you plan to come to Thailand in the upcoming months, you can stay at least 45 days hassle-free.

Follow us on Instagram if you want to be part of our perpetual traveling life 🌎

Something to think about

“The first step—perhaps the most enormous step—is to find what you are genuinely interested in.

If you are genuinely interested, you will discover endless opportunities for improvement. But if you are disinterested, even obvious improvements will feel like a chore.

And, if you can maintain your genuine interest and curiosity as the years accumulate, you will become hard to compete with because you will have skill to go with your passion. If you're interested, you're dangerous.” James Clear

A question to ask yourself

Also, by James Clear:

What is one step I can take today to help create the outcomes I want in life?

Current habits

Here are my habits:

Headspace 506 days

Duolingo 512 days

I was not so impressed with Ling yet, so I am trying Pimsleur this week.

Do you have your preferred language app? Just tweet me

Content of the week

We published a new piece of content this week, a comparison between Ledger Nano S Plus and Ledger Nano X. So, if you are in the midst of deciding which hardware wallet to go for, you can read more here.

September 22, 2022
Leo Brunnhofer

What are we working on?

Maja and I are all about getting back into our old working rhythm. We had to refocus, as the last couple of weeks in Europe were not as productive as we are used to. But we feel that we will quickly get back on track, with strong health and work-related routines, and finish the last couple of weeks of their OKR iteration victorious.

My current focus is on the NFT project New World Guardians that I'm part of, improving Weirdo.Rocks website and content, and spending more time on crypto research.

Cryptos

The biggest crypto news is Ethereum merge that is happening this week. They are transitioning from Proof-of-Work to Proof-of-Stake, one of the most extensive upgrades in the history of this currency. While the crypto world says this merge can make or break the crypto market, we most certainly hope it will make it.

If you are interested in this transition and the upsides of the merge, you can check this article here.

Traveling

Bangkok will be our home for at least one and a half months. We are staying in a neighborhood near Ekkamai train station called Phra Khanong. We already got familiar with some local food stalls and coffee places nearby. This is always the first thing we do when we move to a new location - explore the neighborhood, figure out where we can get good food, buy our groceries and other essentials, which helps us feel at home.

At the moment, we have a rain season here. September is one of the rainiest months of the year, and this year some people are saying that we are experiencing one of the heaviest rains in last 20 years. The rain usually comes in the afternoons/evenings.

If it’s hard to imagine what I’m talking about, here is me on the way to the grocery shop just next door.

Follow us on Instagram for more feet-pics 👣 😜

Something to thing about

"Inspiration usually comes during work, rather than before it." Madeleine L'Engle

Don't wait forever till you get started. You don't need a perfect plan or product to get out there. If you wish to do something, it's better to start with small steps, get going, and learn on the way. Especially if you want to do something different from what you are doing now, something new, overthinking will keep you from making progress. Getting in motion is the hardest part, and as soon as you are making the first steps, the rest will follow too.

Current Habits

We can say that our learning habits are smooth as butter. I’m afraid we will never be able to stop with current streaks, as we don't want to break them anymore.

Here are my habits:

Headspace 499 days

Duolingo 505 days

I also started to learn Thai. I'm not sure about the best app yet, since Thai is not available on Duolingo, but I'm giving Ling a try.

Here are Maja's habits:

Duolingo (German) 732 days

Drops (Thai) 9 days

Maja is also soon having a year of 10-mins yoga exercise and 10-mins power exercise as part of her morning routine.

September 13, 2022
Leo Brunnhofer

What are we working on?

We are in the middle of our OKR iteration, Quarter 3, and focusing mainly on improving our site, and working on new crypto-related content. In addition, we plan to add more travel-related content and keep you posted on our social media profiles.

If not yet, you can follow us on our Instagram and Facebook profiles.

Crypto News

Internet Game Season 2: The Bearmarket Battle, hosted by Gmoney & Leah Lamarr, is live.

The mint was on Aug 30 - 31. and 60% of mint will go to NFT prizes, chosen by the community through Discord vote. The 1st prize is Bored Ape #4317.

We were part of Season 1, and it was super fun, so we are excited to participate in the sequel.

Are you participating too? Just tweet me

Traveling, what's next?

Three days, and we are in Bangkok. We are excited about this, as we feel our European experience was a bit too long. We love it here to meet friends and families, but both Maja and I think our hearts are already in Asia. ❤️

Traveling became our lifestyle and having no permanent apartment freed us from all the unnecessary clutter and complications that come with owning too many things. Besides that, I think that main benefits of traveling are open-mindedness and acceptance. Stepping out of your environment and getting to know other cultures, people, and ways of life helps you see the world from a different perspective.

I am currently watching.

My days are going by so fast at the moment, but I watch an episode of Sons of Anarchy in the evening when winding down. Oldie but goodie.

Tool of the week

Pomodone App is my secret weapon for getting things done. It's based on Pomodoro Technique:

It is a time management method developed by Francesco Cirillo in the late 1980s. It uses a kitchen timer to break work into intervals, typically 25 minutes in length, separated by short breaks. Each interval is known as a pomodoro from the Italian word for tomato after the tomato-shaped kitchen timer Cirillo used as a university student.

So in practice, it works like this - You set a timer for 25 minutes (or similar time range), work, then take a 5-minute break—and repeat the process three more times. After that, take a 15- to 30-minute break.

A simple productivity tool, but I couldn't imagine my workday without it.

Current Habits

Duolingo 498 days

Headspace 492 days

Our content of the week

I wrote a detailed SecuX Review that you can check out here.

If you are looking for a high-security grade hardware wallet and like SecuX, you can use our code "WeirdoRocks" to get a 15% discount.

September 13, 2022
Leo Brunnhofer

Something to think about

"And those who were seen dancing were thought to be insane by those who couldn't hear the music." Friedrich Nietzsche

and

"Life is an endless series of interruptions and distractions." Many times "those distractions" have two legs.

You must take care of your valuable time, especially if you are an entrepreneur or digital nomad. You need to be protective of it; otherwise, people can quickly steal it from you. They don't do this on purpose, but it happens because they have their own priorities, and they usually are unaware that you are busy, too, even though you are not working in the office from 9-5. People often think you can adjust your time more easily because of this 'freedom' you have as a digital nomad or remote worker.

This quickly escalates into not making the progress needed. However, strong will, systems, and habits can help you get on track and, most importantly, stay on track.

We are trying to built our days around habits and utilizing OKRs to stay on track with all the tasks. We wrote an ultimate guide to OKRs, so check it out if you want to join the movement.

Tool of the week

Talking about OKRs and habits, we can't pass Notion, or as I like to call it, my extended brain. 🧠 I use it daily for everything from creating notes, databases, performance boards, calendars, crypto dashboards, and basically everything that comes my way - I add to Notion.

It's a very versatile tool and helps us tremendously with having our small team aligned with the tasks.

Current Habits

Duolingo 491 days

Headspace 485 days

We are looking into apps to start learning Thai, as it's not supported on Duolingo. But, for now, the best one that we found is Drops.

Do you know it and already use it? Just tweet me

Our content of the week

We published 2 articles in the last week, both around cold staking:

Cold Staking - How to stake your crypto coins with BitBox02 Hardware Wallet

Is it possible to stake your coins with Ngrave Zero Hardware Wallet?

August 30, 2022
Leo Brunnhofer

The weeks are passing by so fast, and I'm thrilled to have the chance to sit down and review the past week and share my thoughts and highlights with you.

Let's go straight to the business!

What I am learning about

My reading and learning material for the last couple of weeks is about Helium Network. While setting my few routers up, I dived deep into the optimal setup and learned about the antennas and how to optimize their performance before we move from Europe.

To learn more about the Helium People's Network, check out our detailed Helium Network Review.

Are you into Helium mining? How is it going for you? Just tweet me

Crypto

Cryptos are a big part of my everyday. I trade daily, getting familiar with new projects, NFTs and stay on top of an ever-changing market.

If you are interested in cryptos and you don't know where to start, you can check our beginner's guide here.

The current market situation is a great time to learn about cryptos.

Traveling, what's next?

We have booked our oneway ticket, and we are slowly getting ready to move to Asia.

Traveling as a digital nomad usually means being flexible with the time. So, for example, we don't need to fix your travel date on the days when your work holidays start and end. For that reason, we can adjust our flight dates to the price of the tickets.

Traveling doesn't have to be expensive. Even if you are tied to specific dates and seasons, you can find affordable tickets with some research and tricks. Here are 13 tips on how to find cheap flights.

Things to think about

My quote of the week is from James Clear's book Atomic Habits:

"Many people think they lack motivation when what they really lack is clarity."

I couldn't agree more! If your goal is unclear and has no meaning, it's hard to get the motivation and drive as you don't even know where you are going. As soon as you make clear outcomes, reaching any goal will become more effortless.

This will help you with building good habits.

My Current Habits

484 days of daily language learning on Duolingo (currently Spanish)

477 days of daily meditation with Headspace

One of the obstacles when building habits is procrastination. “Oh, I want to do my morning exercise, but I'm too busy now; I'll do it in the evening.”

Sounds familiar? As soon as you say this sentence, your probability of doing this exercise drops close to 0. We wrote some tips on how to fight procrastination and achieve your goals daily, so you can read it (now, not later) 😉

Are you a procrastinator? How are you fighting it? Just tweet me

New Weirdo Content

We published a new article on Best Crypto Exchanges. If you are looking for one or can't decide which one is best for you.

August 23, 2022

We are slowly rolling into the second half of August. After a couple of weeks of high-paced work on our projects, we took off last Friday and attended a small festival in Bildein, Austria - PictureOn.

It was a great end of the busy week and time well spent with our friends.

Let's dive into some of the other highlights of the Weirdo week.

What are we working on?

Most of my time, I still dedicate to New World Guardians - an NFT project where blockchain meets social impact. 20 % of the NFT sales revenue goes to six social impact projects. If you are curious about the projects, you can find out more about them here: https://newworldguardians.com/en/#projects.

Besides that, we have a couple of crypto articles in the pipeline that will be added to our blog in the following week. So stay tuned on weirdo.rocks/blog.

Cryptos

The setup of Helium routers was a bit tricky, but the first three are up and already mining Helium. We plan to set up 2 more before we leave Europe. We are part of the Helium peoples network now; it's fun seeing the network grow.

To learn more about the Helium network, check out our detailed Helium Network Review.

Ethereum just completed the Goerli 'merge' last week. The final and most significant test before shifting the network from a proof-of-work consensus model to proof-of-stake. The mainnet merge is estimated to happen in the mid of September. This event seemed to cause the ETH rally last week.

Do you follow crypto news? Just tweet me

Traveling, what's next?

It's over a year since we started our perpetual traveling lifestyle. And we can say with certainty that this was one of our best decisions. Our lives changed significantly, from being location and system independent to decluttering lives and putting all our belongings in a backpack.

We travel slowly and stay longer in one country or city, as Maja and I, like to get to know the area and the culture well. I like the feeling of not being rushed and slow traveling also helps us to build good routines that are important to stay productive.

Maja also collected some tips that help us stay productive while living as a digital nomad: 5 tips that will help you stay productive while living as a digital nomad.

Things to think about

In the long run, good and bad habits will make the difference in creating a life that you want for yourself. August Bradley nailed it with these lines to think about:

The first time it's a mistake.

The second time it's a decision.

The third time it's a routine.

The fourth time it's a bad habit.

The fifth time it's a challenge to stop.

The sixth time it builds regret.

The seventh time it seeps into your identity.

What I am listening

This week's best tunes are coming from the Festival's playlist on Spotify - Picture On 2022

The highlights for me were: Buntspecht, Alicia Edelweiss, Gnackwatschn, Kurt Razelli.

My Current Habits

477 days of daily language learning on Duolingo (currently Spanish)

470 days of daily meditation with Headspace

Maja hit her 700-day streak on Duolingo this week, learning German. 👏 👏

When building good habits, it's essential to have a consistent time in the day when you do them. The best time for us is in the morning, which also helps us to start the day victorious.

What’s stopping you from replacing useless morning social media scroll with doing something good for yourself, like 10 min exercise or quick language learning? Just tweet me

August 17, 2022
Leo Brunnhofer

Maja and I spent a productive week in Slovenia, ending with a nice party. We will stay here for another week and leave for a PictureOn festival in Austria.

We haven't visited any festival for a long time, so we look forward to attending this one.

The week was busy, but I made great progress on my projects.

Let's check some highlights of the Weirdo's week.

What are we working on?

On Friday, we launched a fantastic new NFT project New World Guardians. If you want to learn more about it, you are welcome to check their website https://newworldguardians.com/ or even leave your email if you want to stay up to date on the upcoming drop of the first NFT collection.

We are responsible for the community and excited to be part of this project and support their social cause.

Cryptos

After waiting for a couple of months, our Helium Bobcat 300 Routers finally arrived.

Helium is building a decentralized IoT Network, where the community is helping to develop the network and getting rewards for the support. The whole network is based on a proof of coverage (PoC) - Proof of Work (PoW) algorithm that uses radio waves to validate the Hotspots' Wireless Network Coverage.

Our goal is to set them up in the upcoming days, start mining, become part of the network, and help it grow.

You can learn more about Helium here: Helium Network Review

Traveling, what's next?

We are staying in Slovenia, more precisely in Novo Mesto. This month is dedicated to family and friends before we fly to Bangkok.

Novo Mesto is Maja's hometown, located in the South-East part of Slovenia. It's surrounded by a lot of forests and vineyards, so it's always lovely to return here to fill up the batteries in nature and our bellies with home-made wine that Maja's brother produces. 😉

Next week we will return to Austria to spend time with my family.

Things to think about

Sometimes it is good to declutter your life a bit to make space for new ideas, people, yourself, and your loved ones. Here are some lines from James Clear to think about:

Sometimes the most productive thing you can do is eliminate the task.

Downsize. The rooms you don't have, don't need to be cleaned.

Donate. The items you don't own don't need to be organized.

Delete. The projects you don't take on don't need to be finished.

Is this a problem that needs to be solved? Or is it a problem that can be eliminated all together?

Tool of the week

Discord - I found Discord in 2020 when I was looking for a tool to organize a remote birthday party for Maja. Since then, is one of the tools that I use daily. We even build our community on Discord. If you are not part of it yet, you can join here for free.

Current Habits

We are still going strong with some of the habits that we successfully build. Here are some of my current streaks.

469 days of daily language learning on Duolingo (currently Spanish)

463 days of daily meditation with Headspace

Both Duolingo and Headspace are part of my morning routine. It's important to start the day strong and prepare for a productive day. I'm working on adding stretching to my routine as an additional healthy habit.

Do you have any morning routines in place? Tweet me here

Our Content of the week

This week, we published a new article, a short guide on how to stake your Cryptos with Ellipal Titan hardware wallet. Ellipal Titan is an air-gapped security cold wallet, network isolated and signs transactions using QR code, making it a good choice for staking your coins securely over a longer period.

If you are interested in which coins you can stake and how the process goes, you can check out the article: Cold Staking - How to stake your crypto coins with Ellipal Titan Hardware Wallet

August 17, 2022
Maja Nagelj

Beginning of May 2021, Maja and I left Austria to go "homeless" and travel the world while building our new business. Since then, we have lived in Spain, Romania, and most of the time in different parts of Mexico.

This is the first of our weekly newsletters, where we will give insight and document our journey. We talk about perpetual traveling, cryptocurrency, entrepreneurship, and personal growth here, but also about what we think, read, hear, and learn.

We hope you find these helpful tips useful and see them as an inspiration.

Let's jump into it.

What are we working on?

Currently, we are mainly writing Content on our Website to help you learn more about Cryptocurrencies and topics around them.

We also started working on an innovative NFT-Community project to build a sustainable company to support different global NGOs. We are helping to develop the community for this fantastic project. I will update you on the details soon.

What is your favorite NFT Community? Tweet me here

Besides that, we also got a new member of the Weirdo family. Julia will support us with community building, social media, and video production.

If you did not know, we also have our own Discord community. You can join here.

Traveling, what's next?

We are still in europe, but our next flight and apartment for the first six weeks are booked. The next stop is Bangkok.

Bangkok is one of my favorite places in Southeast Asia. I've been here several times and always had a blast. What is different now is that we will live there for a while. After Bangkok, we maybe go to Vietnam or Ko Pha Ngan; we are not sure yet. I will keep you posted.
What is your favorite place in southeast Asia? Tweet me here

Our progress - OKRs till October set

Traveling and building a business can be a mess. Objectives and Key Results are helping us to stay on track and follow our direction. Our third quarter started two weeks ago, and we are hyped to make it happen.

There will be a lot of new Content around cryptos for you. We also will improve our Website to make your visit a better experience.

Current Habits


Habits and systems are an essential part of reaching your goals. Here are some of my current streaks.

455 days of daily language learning (currently Spanish)
449 days of daily meditation with Headspace.

I am currently listening


Currently, I am listening to a Bookclub discussion about Human Action from Ludwig von Mises on Spotify. Heavy stuff in 51 hours.

I am currently reading

I am reading the Daily Stoic:366 Meditations on Wisdom, Perseverance, and the Art of Living: Featuring new translations of Seneca, Epictetus, and Marcus Aurelius. A great read by Ryan Holiday.

Our Content of the week


Maja published three articles this week. Great job. Two are crypto-related, and one is travel related.


- Staking with the Ledger Hardware Wallet
- Best Crypto Credit Cards
- A Guide to Cozumel - (Unplanned) weekend escape from loud Playa del Carmen

That's it for this week.

What is your favorite insight, article, or tip? What do you want to see more of, and what should we write about? Do you have any other questions?

Just tweet me your feedback.

July 31, 2022
Leo Brunnhofer

One key to successfully starting your own business is working on an idea, or a more significant project is making consistent, daily progress towards your goals. Especially if you do not have your team and limited time and money resources, you need to be ultra-focused and ideally make small steps forward every day. 

What has helped us for many years now are Objectives and Key Results for the direction and challenging but achievable goals, and weekly accountability partner meetings for the permanent progress part. 

There are different types of accountability partnerships that you can go into. You can read more about that here

Accountability groups try to help and support each other to get better in whatever we want. Accountability is about commitment, and to stay accountable towards the own goals, the weekly meeting is an essential part of it. There is no half-ass way to attend it. 

Here is an Accountability Partner Checklist and some Rules if you want to set up your accountability partnership group 

  • Try to make space in your schedule every week. Do not skip the meeting if you feel that you did not make the progress you wanted to do. Treat the meeting as you would a doctor's appointment or a business meeting. 
  • Keep the meetings fun, positive, non-judgmental, encouraging, give honest feedback and keep it brief. 
  • Agree on the meeting times in advance, and give the member time to confirm. If it is impossible to attend the meeting, try to find another time/date, or you skip a week. That's also fine. Usually, it helps if you make a fixed weekly appointment and only change it if needed. 
  • If you use Objectives and Key Results or any other tracking system, update your progress before the meeting. 
  • Something can come between you and the meeting last minute (A lousy internet connection, something urgent.) If this occurs, write a short message to the organizer, and it is fine as well.
  • If you can not attend the meeting, talk to your partner or a friend about your progress. 
  • Respect the time of others and be on time. Keep in mind everybody is reserving time for the Accountability Partner Meeting. 

Many meetings in, especially bigger companies, are often a big waste of time. In many cases, an email would be sufficient instead of 10+ people sitting together without having a clear outcome in mind. When you meet with your accountability buddy, try to keep it short and with a specific predefined result. 

If you are looking for a professional accountability partner, check out our services here

March 22, 2022
Leo Brunnhofer

It's heartbreaking and brutal what has been and is happening in Ukraine in the last weeks. This Russian invasion seems to be from a different Millenium; there should not be space for the Putin's of this world, who are are forcing millions of innocent people on to destruction and death. 

It gives hope and good to see how the people of the world are standing with Ukraine and trying to help where it is possible. 

There are many different ways how you can help as well. Friends are collecting warm clothes medical equipment and bringing it to Ukraine. Others are offering shelter and organizing places to stay for Ukrainian refugees, driving to the borders to get people into safety, or are collecting donations.

Nowadays, you also can donate cryptocurrency to nonprofit organizations or directly to the Ukrainian government. Ukraine has received around 50 million dollars in crypto donations since the war started. The Ukrainian government accepts Bitcoin, Ethereum, Tether, Polkadot, Dogecoin, TRON, Solana, Monero, and NFTs.

Donations of cryptos are more transparent, faster, and more cost-effective than donating in FIAT currencies. Be careful and do your own research before you choose an organization. There are also many scammers around trying to profit from the current situation. 


Here you can track the wallets of the Ukrainian government.

An overview of all donations.

Dashboard of Crypto Donations to Ukraine

ETH Wallet (inkl. Cryptopunk NFT #5364)

BTC Wallet

Tron Wallet

Some other NGOs are accepting Crypto Donations for Ukraine. Do your own research.

List of NGOs accepting Cryptocurrencies: 

https://www.comebackalive.in.ua/

https://www.ukrainedao.love/

https://twitter.com/KyivIndependent 

Write me at hello@weirdo.rocks or on Twitter if you have an addition to my list. 

Do not forget, Putin is NOT the Russian people.

Stand with Ukraine,  Peace!

March 8, 2022
Leo Brunnhofer

I started my dive into the NFT world last week. I love to learn hands-on, which I also do here. Here are a few learning and things that I have found out so far. 

First, it is hard to keep track of all the projects. There are so many great researchers and accounts out there, many new projects launching every day. What I am trying to do, is to form a daily routine. There are some resources that  I check daily. I created a Crypto Event Calendar, where I also added the most exciting NFT drops, and I am doing research for the NFT article(s) that will come out in the following weeks. Today on the Event calendar was the Invisible Friends NFT Collection, which did very well after launch. I could not mint one, but for the following bigger projects, I will be better prepared. 

My next steps are to follow the smart money to spot new projects and create a method to do a quick fundamental analysis of exciting projects. 

Some tools I am using for my research are:

  • Nansen (great features and details)
  • Opensea (biggest marketplace and great research tool)
  • Rarity.Tools
  • Icy.Tools
  • Twitter (deep dive and find accounts that are spotting good projects early. 

Here you find a more detailed overview of the best NFT Tools.

Stay weird and leave your email for updates.

February 24, 2022
Leo Brunnhofer

Cryptocurrency is all the rage these days. It is hard to keep track of what is happening.

New crypto projects, testnets, and mainnets are launching, Airdrops are happening, and NFT projects are dropping every day. We will also add conferences, FOMC meetings, and other relevant events.

That's where the Weirdo's Crypto Event Calendar comes in! This handy resource lists all the latest and greatest crypto events, so you can stay up-to-date on everything crypto.

We will try to make the calendar collaborative. If you see that something is missing, just add your event, we review and add it.
Check out the calendar here.

February 15, 2022
Leo Brunnhofer

I have been following the NFT world for some time now and bought one here and there, but I did not take the time to dive deeper. Since they are here to stay, I want to go down the rabbit hole and learn.

This post is my kick-off to do so.

I prepared a new ETH wallet, funded it with one ETH, and I am committed to learning more about Non-fungible Tokens. The ETH can be seen as my budget for learning about NFTs, and I will use it to make hands-on experiences and hopefully multiply.

What are your favorite resources (Blogs, Podcasts, Twitter, Telegram, Discords, etc.) around non-fungible Tokens?

February 12, 2022
Leo Brunnhofer

You should know what impermanent loss means if you are into decentralized finance (DeFI) and especially liquidity mining. As my learning bit of the day, I try to explain. 

When you provide liquidity to a decentralized exchange's (DEX) liquidity pool like Uniswap, you usually offer two different coins to a pool. The provided liquidity can then be traded on the exchange. 

Impermanent loss refers to a deprivation that happens when the price of the deposited assets changes between deposit and withdrawal. The loss is realized when withdrawn. The best is to provide liquidity for crypto assets with similar price movements; the impermanent loss is the biggest if one coin loses a lot and the other wins a lot. If the price of both cryptocurrencies is declining at a similar percentage, the impermanent loss is also small. 

Here are some examples

Before you start with providing liquidity, you should understand the projects you are investing in, how Automated market makers (AMM) work, dive into the technicals like use cases, price history, total value locked (TVL), and annual percentage yield (APY). It would help if you also understood Impermanent Loss, different scenarios, and the risk-reward ratio. 

To illustrate impermanent loss, we will show some examples. We will use the Impermanent Loss Calculator to show some scenarios. We are not considering the APY in our examples. 

Let's say you were providing Axie Infinity (AXS) and Wrapped Ethereum (WETH) to farm the Ronin (RON) Token prelaunch. Here are some scenarios. 

Example 1: Both assets prices increased

Prices 1. Feb 2022

1 AXS $50

1 ETH $3000

Prices 7. Feb 2022

1 AXS $70

1 ETH $3100

Impermanent loss: 1.14%

If $500 of AXS and $500 of ETH were held

- Have 10.00 AXS and 0.17 ETH

Value if held without providing liquidity$1,216.67

If $500 of AXS and $500 of AXS were provided as liquidity

- Have 8.59 AXS and 0.19 AXS (in liquidity pool)

Value if providing liquidity: $1,202.77

You gained over $200 in both cases, but as a liquidity provider, your total value is $14 less than when you just would hold your coins. The reason for that is impermanent loss. 

Example 2: Both assets prices decreased

Prices 1. Dec 2021

1 AXS $135

1 ETH $4300

Prices 7. Feb 2022

1 AXS $70

1 ETH $3100

Impermanent loss: 1.34%

If $500 of AXS and $500 of ETH were held

- Have 3.7 AXS and 0.12 ETH

Value if held without providing liquidity$619,72

If $500 of AXS and $500 of AXS were provided as liquidity

- Have 4,37 AXS and 0.1 ETH (in liquidity pool)

Value if providing liquidity: $611,40

In both cases, you lost around $400. As a liquidity provider, your total value is $8 less than when you just would hold your coins. This is because of impermanent loss. 

Example 3: One asset's price increases and one decreases (most significant impermanent loss)

Prices 1. Dec 2021

1 AXS $70

1 ETH $4300

Prices 7. Feb 2022

1 AXS $140

1 ETH $2150

Impermanent loss: 20%

If $500 of AXS and $500 of ETH were held

- Have 7.14 AXS and 0.12 ETH

Value if held without providing liquidity$1250

If $500 of AXS and $500 of AXS were provided as liquidity

- Have 3,57 AXS and 0.23 ETH (in liquidity pool)

Value if providing liquidity: $1000

The impermanent loss is 20%, and if you just would hold both tokens, you would have made $250 more. 

If the price of your provided assets moves in different directions, it's the worst-case scenario when it comes to providing liquidity. In the example, it looks like you always lose when you provide liquidity compared to just holding the coins. This is not true and is just the case because we did not consider APY and other rewards. 

You can also provide liquidity in the form of stable coin pairs. In a bull market, this does not make much sense since you are not profiting from the rise in the market. In the bear market, this can make sense since you are earning a share of the trading fees by providing liquidity. 

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February 6, 2022
Leo Brunnhofer

This section will be the log of our Weirdo'Journey. With thoughts, insights, learnings, brain-dumps around the Crypto World, Perpetual Traveling, and everything important to me and us at the given point in time.

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February 6, 2022
Leo Brunnhofer