Where does the money come from? Where does it go?
Be aware that this is a very high-level summary & may not include the specific Dapp miner you are invested in or are looking at investing with for your crypto investment. They are ALL different. Some more than others….
If you would like to see what investments I’m currently active in then go read my referral link article.
What is a Dapp Miner???
Typically, a Dapp miner is an online contract that interacts with a specific token, to produce a daily return. This daily return may be fixed, or variable.
Most of the time it is a variable return.
With a Dapp miner, you don’t need to go spend a lot of money buying an expensive hardware rig to mine tokens, like a Bitcoin miner. You also don’t need to have it turned on running all of the time, burning up precious energy & running up your power bill.
Dapp miners are a whole totally different type of investment.
The Different Parts of a Dapp Miner
Dapp miners are made of several different parts that work together, producing that daily APR from the contract. Here are the most common parts for a typical Dapp Miner.
The Contract
This is where all the action takes place. The contract determines how the Dapp miner will interact with tokens when it comes to deposits, withdraws, compounds, & the Total Value Locked. When any of those things change the contract reacts & changes things inside the miner accordingly.
Eggs (little miners inside the Dapp)
These are the little workers inside the contract. They determine how much you are earning, based on how much they are worth & how many of them you own, inside the Dapp. You “buy eggs” when you invest into the miner, “sell eggs” when you withdraw, & “hatch eggs” when you compound. Each Dapp miner is different & may have different names for the eggs. Most of the type the eggs are just known as little miners inside the Dapp.
Total Value Locked (TVL)
When you invest in a Dapp miner your investment is usually locked & can not be removed by you. When several other users invest in the same Dapp miner, their investment amount is added to, & locked with, your investment amount. The total amount that is invested into this Dapp from all the users is known as the Total Value Locked. This is the total amount of funds inside the Dapp miner contract that be paid out to the users.
Your TVL
This is your current position in the Dapp, based on how many eggs (little miners) you own & their value at that time. Your TVL is determined by multiplying the miner value times how many miners you have. The more miners you have & the more valuable they are then the bigger your TVL in the Dapp.
Earned Amount
Sometimes this is called a “barrel” or “bucket” & the amount that you have currently earned since the last action you have taken in the contract. The amount you earn daily will change with every transaction within the Dapp, in relation to your TVL. As your TVL goes up your earnings may increase. As your TVL goes down, your earnings may decrease.
All of these parts are constantly working together to determine your relative TVL & daily earnings.
How Does it All Work?
This is how these parts of a Dapp miner work together (as far as I understand it anyway).
- You invest in the Dapp. This establishes your TVL inside the contract, buys you some miners, & starts earning back your investment.
- Since you invested in the Dapp, your investment is then added to the total value locked (TVL) & cannot be withdrawn.
- Your miner’s value times the number of miners you own determines your TVL in the Dapp.
- Your TVL in the Dapp determines how much your estimated daily earnings will be. This is constantly changing, with every transaction in the Dapp contract.
- When you compound your earnings, those earnings go back into the Dapp TVL & buys you more miners, at there current values.
- When you withdraw your earnings, the amount withdrawn is taken from the contract TVL. This then lowers the contract TVL, the price of miners, your TVL, & your estimated earnings.
- The goal is to withdraw more than you invested. If you can do this then you’ll make a profit. If you can’t then you’ll have a loss.
As you can probably already understand, making a profit in a Dapp miner is a race against inflation.
Inflation happens over time because the number of miners in the contract is constantly increasing with each transaction inside the contract. The goal is to buy miners when they are cheaper. If the TVL of the contract goes up then these miners will increase in value, which will then increase your TVL in the contract, which will then also increase your earning potential!
How can we Make Money with a Dapp miner?
In order to make money with a Dapp miner you must find a way to fight inflation. You must find a good strategy that keeps your TVL in the Dapp high.
Well, there are several different strategies that you can try.
- Compounding often
- Reinvest often
- Withdraw seldom
- A combination of the above
Some Dapp miner contracts actually put these rules in their contract, to help fight inflation automatically.
- They may set a minimum number of compounds between withdraws
- They may set a maximum number of days your can earn between withdraws.
- They may set a minimum reinvestment amount between withdraws
There are several other things that the Contract developers can do to help fight inflation within the contract.
Some developers actually have outside revenue coming into the miner’s contract, which helps fight inflation a lot!
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High Risk, High Reward
In any case, it is always a good idea to do a lot of research before investing into the Dapp Miner.
- Find out how the contract works
- Has the developers been involved with any other projects & how have they done overtime?
- Do they have any social media accounts & how are they doing?
- How old is this miner?
- Look at the contract on the blockchain. How has its TVL been doing?
If do jump into a project without doing research on it first then you run the risk of being Rekt.
If everything looks good then proceed at your own risk.
Is the Risk Worthwhile?
Once you invest in the project then you can use one of the strategies mentioned above & have the possibility of making a lot of money in a short period of time.
Imagine if you could make 1% daily of you investment (if the daily interest was stable & lasted 1 year)…
- By itself this would equal 365% return on your investment if it last a whole year. (If you invested $100 then it would turn into $365 in a year, if the contract lasts that long.) — You have just withdrew $365 with a $100 investment, in a year.
- Suppose you compounded your earning daily. $100 investment, earning 1% daily, & compounding daily would equal $3,816.13 (3716.1% return). — You have withdrawn $3716.10 with a $100 investment, in a year.
- Suppose you withdrew everyday & then reinvested 50% back into the miner. Investing $100, earning a steady 1% daily, withdrawn your earnings everyday, & reinvest 50%. This would equal a total $1,041.14 interest earned. If you kept half & reinvested half then you have withdrawn $520.57 over the course of the year. Plus, your TVL in the contract may have stayed pretty stable or gone up, which in turn will earn you more.
If you look at these 3 different options. Ask yourself this question:
which would you choose?
The better question to ask is which of these options is the least risky?
- Both options 1 &2 — Your money is held by the contract for a whole year. You are at 0% ROI for a whole year. You will be risky your investment capitol for a whole year. If the contract is still active, in a year, then you have made a pretty good profit. If the project has rugged, or is no longer active, then you have just lost your investment.
- With option #3 — You have withdraw all along the way & reinvested half of it back into the contract. This means that in 4 months & 16 days, you would have withdrawn all of your $100 investment back, plus grown your TVL in the miner. Also on this day, your TVL in the miner will be around $199.0291, earning you $1.990291 daily. At the end of a year, if the contract is still going & you are still earning around 1%, then your TVL in the miner will be around $614.3933, earing around $6.143933 daily. This is a growth of over 600% & an ROI of around 517.46%!
How Do I Do It?
Over time, I have become a good believer in the 50/50 strategy, which is option #3 above.
I see this as having my cake & eating it too.
I withdraw my earnings along the way. This way I’ll have some or all of my investment back, in case the project rugs. If the project rugs & I have around 50% of my investment back, I’ll still be out the other 50% of my investment. But I won’t be out 100%.
My goal is to reduce my risk, while increasing my earning potential.
The other 50% that I reinvest increases my TVL, which then increases my earnings. This then increases my next withdraw amount, of which 50% is reinvested back into the miner. Then the cycle repeats itself over & over again, as long as I keep it up.
Summary
In this article, we have looked at what a Dapp miner is, the different parts inside it, & how it all works.
We have also looked several different the strategies, along with the risks associated with each strategy.
Hopefully, this will help you understand how a Dapp ROI Miner works & how to make money with it.
